We can invest money very easily in the post office. But you have to pay great attention to one thing that tax benefits are not given on many post office schemes. That is, no tax deduction is available under section 80C of the Income Tax Act, 1961.
With this, you need to keep one thing in mind that TDS is deducted only from certain transactions. TDS is deducted when any transaction value exceeds the prescribed limit. If the figure does not exceed the pre-determined level, no TDS will be deducted.
What is TDS?
‘Tax Deducted at Source’ is called TDS. It was created for direct tax payment from the source of a person’s income. TDS is used by the government to reduce tax evasion. If you have also made an idea of investing in any post office scheme, then you must know that on which schemes TDS is deducted and on which TDS is not deducted.
Let’s know in which scheme it will be deducted and in which scheme you will get tax benefit?
India Post Recurring Deposit
If the interest you get is more than your income, then the bank or post office deducts tax from the interest you get on your deposit amount. For general citizens, the limit is Rs 40,000, while for senior citizens the TDS deduction limit is Rs 50,000. If the amount deposited by you is less than the prescribed threshold level, then the bank or post office does not deduct any tax.
India Post Time Deposit
Under Section 80C of the Income Tax Act, a deposit of up to Rs 1.5 lakh is eligible for tax deduction under a 5-year TD. This means that there will be no tax benefit of any kind on the deposit of one year, two years or three years in the TD account.
Post Office Monthly Income Scheme Account (MIS)
Tax is levied on the interest you get in this scheme. There is no tax deduction under section 80C of the Income Tax Act, 1961. TDS will be deducted on interest above Rs 40,000 and Rs 50,000 in case of senior citizens.