5 Post Office schemes to save tax on up to ₹1.5 lakh income by March 31: PPF, SCSS, NSC, SSY, Time Deposit

Post Office offers five small savings schemes that can be used for tax saving in the old tax regime for FY 2024-25. These schemes are backed by the central government, ensuring a full guarantee on returns.

If you are still in the old regime, you should complete all your tax-saving investments for FY 2024-25 before March 31, 2025.

In the old regime, you can claim tax deduction on up ₹1.5 lakh of your total income under section 80C of the Income-tax Act, 1961. This deduction can be claimed against investments in certain tax-saving schemes.

Let's look at these schemes and their key features:

You can invest up to ₹1.5 lakh in Post Office PPF account. This PPF account is same as the PPF accounts offered by mainstream banks like SBI and HDFC Bank. Investment in PPF not only qualifies for deduction under section 80C but the returns generated during the investment period and the amount withdrawn on maturity are also tax-free. Currently, Post Office PPF account is offering 7.1% interest.

This account is only for the girl child. If you are a guardian of a girl child aged below 10 years, then you can open a SSY account in her name in the post office and claim tax deduction by investing up to ₹1.5 lakh. The SSY account is currently offering 8.2% interest, which is higher than most of the bank fixed deposit plans.

Post Office NSC account also qualifies for section 80C deduction. The NSC account matures in 5 years and it is currently offering 7.7% interest. The interest from the scheme is payable at maturity.

This account is only for senior for citizens aged above 60 years. Retired civilian employees aged above 55 years and retired defense employees aged above 50 years can also open this account by investing within one month of receipt of retirement benefits.

One can claim section 80C deduction up to ₹1.5 lakh by investing in this scheme. However, senior citizens are allowed to invest up to ₹30 lakh in this scheme, which is currently offering 8.2% interest.

This is like any other 5-year tax-saving fixed deposit plan offered by banks. Currently, the 5-year time deposit in post office can be booked at 7.5% interest. Deposits under this scheme qualifies for deduction under section 80C, subject to a limit of ₹1.5 lakh in a financial year.

How much can you invest in these schemes?

Under section 80C, you can claim a maximum deduction of only up to ₹1.5 lakh. Hence, the sum of all your tax-saving investments in schemes qualifying for section 80C deduction should not be more than ₹1.5 lakh.