kinds of creditors

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bharti

bharti (Querist)
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29 May 2009 kinds of creditors

veeraju mavuri

veeraju mavuri (Querist)
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29 May 2009 hi sir
what is the meaning of Post offfice savings under sec 80c?
whether Recurring Deposits made monthly allowed

CA PARVEEN GAMBHIR

CA PARVEEN GAMBHIR (Expert)
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30 May 2009 It is the amount deposited in 5 year Time Deposit Scheme in Post Office that may not cover Recurring Deposits.

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Asha Kanta Sharma

Asha Kanta Sharma

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02 August 2024 Under Section 80C of the Income Tax Act, 1961, in India, **Post Office Savings** are a category of investments that qualify for tax deductions. Here’s a detailed explanation of what this entails:

### **Post Office Savings and Section 80C**

1. **Post Office Savings Account**:
- **Nature**: A Post Office Savings Account is a savings account opened with the Indian Postal Service at any of its post office branches.
- **Tax Benefits**: Contributions to a Post Office Savings Account qualify for tax deductions under Section 80C. The interest earned on this account is also exempt from tax up to a certain limit (i.e., interest up to ₹3,500 in a financial year for an individual and ₹7,000 for a senior citizen).

2. **Recurring Deposits**:
- **Definition**: Recurring Deposits (RDs) are a type of fixed deposit where a fixed amount is deposited at regular intervals (monthly) for a predetermined period.
- **Tax Treatment**: Recurring Deposits in the post office are considered a part of Post Office Fixed Deposit Schemes. Investments in Recurring Deposits with the post office also qualify for tax deductions under Section 80C.

### **Key Points to Note**

1. **Eligibility for Tax Benefits**:
- **Post Office Savings Account**: Tax benefits are available for the deposits made into a Post Office Savings Account.
- **Recurring Deposits**: Monthly deposits into Post Office Recurring Deposit Accounts are eligible for deductions under Section 80C.

2. **Limit on Deductions**:
- **Section 80C Limit**: The total amount of deduction allowed under Section 80C is up to ₹1.5 lakh per financial year. This limit encompasses all eligible investments, including Post Office Savings Accounts, Recurring Deposits, Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), and others.

3. **Interest and Returns**:
- **Interest Rate**: The interest rate on Post Office Recurring Deposits is determined by the Postal Department and can vary.
- **Tax on Interest**: Interest earned on Post Office Recurring Deposits is subject to tax. However, it does not affect the deduction available under Section 80C for the principal amount deposited.

### **Action Steps**

1. **Open Post Office Accounts**:
- **Visit Post Office**: To avail of these benefits, visit your nearest post office to open a Post Office Savings Account or Recurring Deposit Account.

2. **Maintain Documentation**:
- **Receipts and Certificates**: Keep all deposit receipts and account statements for record-keeping and to claim deductions during tax filing.

3. **Tax Filing**:
- **Claim Deductions**: While filing your income tax return, ensure that you claim deductions for investments in Post Office Savings and Recurring Deposits under Section 80C.

In summary, investments in Post Office Savings Accounts and Recurring Deposits are eligible for tax deductions under Section 80C of the Income Tax Act. Ensure that you adhere to the maximum deduction limit of ₹1.5 lakh and maintain proper documentation for tax filing purposes.