The government has announced that some of the tax sops on Post Office schemes would be restored. A bonus of 5% would also be paid on the Monthly Income Scheme (MIS) / Monthly Income Account (MIA).
The government has announced that the benefit under Section 80C of the Income Tax Act (IT Act) would be extended to two Small Savings Schemes:
- 5 year post office time deposits (fixed deposits) – These have an interest rate of 7.5%
- Senior Citizen’s Savings Scheme – It has an interest rate of 9%
This benefit will be available on investments made on or after 1 April, 2007.
The government has also restored the bonus on Post Office Monthly Income Scheme (PO MIS) / Post Office Monthly Income Account (PO MIA). The bonus would be paid at the rate of 5%, upon maturity. This would be applicable for new accounts opened on or after Dec 8th, 2007.
(To know all about PO MIS, please read “Post Office Monthly Income Scheme (PO MIS)”)
The effective yield would jump to 8.9% (from the current 8.3%) due to this bonus.
It should be noted that there was a bonus of 10% on Post Office Monthly Income Scheme (PO MIS) / Post Office Monthly Income Account (PO MIA) earlier, but it was withdrawn by the government some time back. These steps have been taken as a measure to encourage and promote small savings.
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