TWO POST OFFICE SCHEMES WILL GET TAX BENEFIT

Good news for those investing in post office schemes. Two of the schemes will fetch tax benefit, and another one will fetch a 5 % bonus.

Those investing in 5-year Post Office Time Deposit Account ( POTDA) and the Senior Citizen’s Savings Scheme (SCSS) would now be eligible for tax exemption under section 80C. This comes into effect from 1 April 2007.

Deposits in a POTDA can vary over 1-5 years. The exemption would be available only for 5-year deposits, which offers 7.5 % interest. This is in line with 5-year bank fixed deposits, which also get tax benefit. However, the interest earned from both these schemes would be taxable.

Also, a bonus of 5% will be given on the Post Office Monthly Income Account. It will be applicable to accounts opened on or after 8 December 2007. the effective yield from the account will now be 8.9 % against the earlier 8.3 %.