Post office has many long term and short term investment schemes. Investing in these schemes also gives tax exemption. But the thing to note is that not all schemes of post office are tax free. Tax is also levied on the interest received on many post office schemes. No exemption is available in these schemes under Section 80C of the Income Tax Act, 1961.
What is TDS?
‘Tax Deducted at Source’ is called TDS. That is, it has been made to pay tax directly from the source of income of a person. It has been started by the government with the aim of reducing tax evasion and increasing revenue. Let us know about the post office schemes in which TDS is deducted and TDS is not deducted.
India Post Recurring Deposit
In this scheme, the interest received on bank and post office recurring deposit will be deducted from the source if the interest income you get is more than 40 thousand rupees. The amount of taxable interest for senior citizens is Rs 50,000.
India Post Time Deposit Scheme
Under Section 80C of the Income Tax Act, tax will be deducted in advance on the amount deposited (up to Rs. 1.5 lakh) under a 5-year time deposit. Deposits of one year, two years or three years in time deposit accounts are not eligible for tax deduction.
Tax is applicable on the interest received through this scheme. While filing your tax return, you need to include the interest income under “Income from other sources” and pay the appropriate income tax.
Post Office Monthly Income Scheme Account (MIS)
Tax will have to be paid on the interest earned in this scheme. There is no deduction under section 80C for deposits. In the case of senior citizens, TDS will be deducted on the interest received above Rs 40,000 and Rs 50,000.
Senior Citizen Savings Scheme (SCSS)
Tax benefits are available under Section 80C on deposits under the Senior Citizens Savings Scheme (SCSS). TDS will be deducted on interest above Rs 50,000.
Mahila Samman Savings Certificate
TDS will be deducted on interest exceeding Rs 50,000 annually under Mahila Samman Savings Certificate. Tax will be deducted on the interest amount above Rs 40,000 for senior citizens and Rs 40,000 for general citizens.
