Post Office offers both long-term and short-term investment options for investors. Investors can choose the schemes as per their needs, but it is important to know that not all schemes are tax-free. Interest earned on some schemes is subject to income tax and is not eligible for deduction under Section 80C. Specifically, tax deduction at source (TDS) is applicable only when the amount paid exceeds a predetermined threshold. TDS is not applicable on amounts below the specified threshold.
Senior Citizens Savings Scheme (SCSS):
TDS is levied on interest earned above ₹1 lakh in a financial year under this scheme. Deposits up to ₹1.5 lakh are eligible for tax benefits under Section 80C.
National Savings Certificate (NSC)
Interest earned on NSC is not subject to TDS. Deposits up to Rs 1.5 lakh in a financial year are eligible for deduction under Section 80C.
Kisan Vikas Patra (KVP)
is not eligible for deduction under Section 80C. The annual interest earned on the KVP is taxable, but TDS is not levied on withdrawals after maturity.
Public Provident Fund (PPF)
Interest earned on PPF investments is completely tax-free, hence TDS is not applicable.
Sukanya Samriddhi Yojana (SSY):
This scheme does not require any TDS deductions. Deposits, interest earned, and maturity proceeds up to ₹1.5 lakh per financial year are completely tax-free.
TDS is applicable on interest earned on Post Office Fixed Deposits (FDs)
, except for 5-year FDs, which are eligible for deduction under Section 80C. TDS is deducted only if the total interest income exceeds a prescribed limit.
Monthly Income Scheme (MIS)
Interest earned from the Post Office MIS is fully taxable. TDS will be deducted if the total annual interest payment exceeds Rs 50,000 for ordinary citizens and Rs 1 lakh for senior citizens.
