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If you want tax-saving returns and guaranteed returns, post office schemes are a guaranteed investment in FY 2025-26. Backed by the government, they offer guaranteed returns, are low-risk, and are best for conservative investors, retirees, or anyone interested in hedging away from volatile markets. Some are even tax free under Section 80C or EEE status.
Invest in a PPF account for tax-free, long-term returns
The Public Provident Fund (PPF) continues to be one of the best tax-saving investments. It currently offers an annual compound interest rate of 7.1% and complete tax exemption on returns and withdrawal. You can invest any amount between ₹500 and ₹1.5 lakh a year, and the entire amount can be claimed as deduction under Section 80C. Although the lock-in period is for 15 years, it provides loan and partial withdrawal after a couple of years.
Invest in NSC for guaranteed 5-year returns
National Savings Certificate (NSC) is another secure investment option for individuals who want fixed returns along with tax advantage. It now gives 7.7% annual interest, compounded every year and payable at maturity. The period is five years, and the investment can be deductible under 80C. Interest is taxable but gets treated as reinvested in the first four years and also gets included in 80C and hence is doubly beneficial.
Invest in Sukanya Samriddhi Yojana for your daughter’s future
If you have a daughter below the age of 10, Sukanya Samriddhi Yojana (SSY) is a good way to save. It is the best return among small savings schemes—currently 8.2% a year—and has full tax exemption under the EEE policy. You can invest ₹1.5 lakh a year and the account matures after 21 years. It is an excellent combination of child-focussed planning and tax benefit.
Select Post Office Time Deposits for the short term
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Post Office Time Deposit accounts work in a way identical to bank FDs but with enhanced rates for individual tenors. The 5-year deposit, for example, offers 7.5% of interest and qualifies for 80C deduction. They can be purchased with a minimum of ₹1,000, and the interest is payable annually. Though the short-term versions lack tax advantages, they provide safe and stable returns for capital protection.
Consider Post Office Monthly Income Scheme for fixed income
If you’re looking for regular income, the Post Office Monthly Income Scheme (POMIS) offers 7.4% interest paid monthly. The maximum investment allowed is ₹9 lakh for a single account and ₹15 lakh for joint accounts. Though not eligible for tax deductions, it’s ideal for retirees and those wanting predictable cash flow. The tenure is five years, and capital is returned at maturity.
FAQs
Q. Is PPF interest taxable?
No. PPF is the EEE model—investment, interest, and maturity proceeds are tax-free.
Q. Can NRIs invest in post office schemes?
No. Most post office savings schemes are available to resident Indians alone.
Q. What scheme is best for monthly income?
The Post Office Monthly Income Scheme is best for monthly regular returns, but the interest is taxable.