The interest rates on Post Office Small Savings Schemes are revised every quarter. The above rates are applicable for the quarter January 1, 2023 to March 31, 2023.
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Post Office Fixed Deposit Scheme: If you want to save tax, then by investing in post office fixed deposit scheme for 5 years, you can take advantage of tax exemption with better returns. Because the benefit of tax exemption is available on the investment made by individuals in the post office time deposit of 5 years. You have to keep in mind that the tax benefit is available only if the deposit is kept for a full period of 5 years.
India Post offers FDs with various tenures such as 1 year, 2 years, 3 years and 5 years, while investing only in 5 year FDs is eligible for tax savings under section 80C of the Income Tax Act, 1961.
Know when and how much interest will be received
Post Office Time Deposit offers 6.6% on 1 year FD, POTD for 2 years and 3 years offers 6.8 and 6.9% respectively. For 5 years fixed deposit, it offers an interest rate of 7%.
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Explain that the interest rates on small savings schemes of the post office are revised every quarter. The above rates are applicable for the quarter January 1, 2023 to March 31, 2023. The rate of interest is payable annually, no additional interest shall be payable on the amount of interest which has become due for payment but not withdrawn by the account holder.
Tax exemption is available under 80C
Section 80C of the Income Tax Act enables taxpayers to reduce their taxable income by making investments that save them money on taxes or meet certain expenses that qualify. It allows an annual deduction from the gross income of the taxpayer up to Rs 1.5 lakh. Individuals investing in 5 year Post Office Time Deposit are eligible for tax benefits. Note that the tax benefit is available only if the deposit is kept till the end of the tenure i.e. 5 years.
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Extension of Fixed Deposit
Depositors have the option to extend their Time Deposit accounts for further terms after reaching their declared maturity. TD accounts can be extended within the specified time limit after the date of maturity. The rate of interest applicable to each TD account on the date of maturity will be effective for the extended period.
Interest Rates for Senior Citizen
Post Office Time Deposit does not offer any higher rate of interest to senior citizens, unlike banks which offer 0.50% to 0.75% to senior citizen customers investing in fixed deposits.
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