Kolkata: Union budget 2025 will be long remembered by the middle-class for income tax reliefs. Thanks to the announcement that finance minister Nirmala Sitharaman made on February 1, a significant amount of extra cash will be in the hands of the average taxpayer without any extra saving effort from the beginning of the new financial year in April. For those who are repaying loans, the RBI rate cut decision announced a few days after the budget is likely to a few more rupees in their pocket since EMIs are likely to come down after the rate cut decision.
While both the announcements by the FM and RBI are primarily designed to generate increased consumption in the economy to push the GDP growth rates and, in turn, uncork private investments to raise employment generation as well, at the individual level one can invest the extra money rather than raising his/her consumption level. Let’s see today, how the additional money can be utilised at one of the most popular schemes in post office.
Income tax slabs and possible savings from April
Budget 2025 has proposed recasting of income tax slabs and rates in such a manner that any individual earning up to Rs 12 lakh a year won’t have to pay any income tax. The upper end of the income level of the no-tax bracket will actually rise to Rs 12.75 lakh a year if the standard deduction of Rs 75,000 is considered. Consultancy major EY India has stated that the following amounts of income tax will be saved in the year between April 2025 and March 2026.
Rs 83,200: Taxable income Rs 12.75 lakh
Rs 32,500: Income Rs 15 lakh
Rs 40,300: Income Rs 16 lakh
Rs 85,800: Income Rs 20 lakh
Rs 114,400: Income Rs 25 lakh
If anyone adds savings on account of loan EMIs, this amount will rise further. But for the moment, let’s consider the income tax savings only for calculation.
Invest in post office recurring deposit
In terms of numbers, recurring deposits (RD) in post office is perhaps one of the most trusted instruments for the common people in India. This instrument pays an interest rate of 6.7% per annum which is quarterly compounded. It needs to be mentioned that quarterly compounding pays more interest than annual compounding. Moreover, post office instruments enjoy a sovereign guarantee on capital. The minimum amount for monthly deposit is only Rs 100 and in multiples of Rs 10 above Rs 100. Let’s assume that a person gets extra cash of Rs 80,000 in FY26, thanks to the income tax reliefs. He/she can easily invest Rs 6,500 a month in post office RD. The calculator shows that the total amount generated after 10 years is Rs 11,10,553 — which includes Rs 3,30,553 interest income on a principal of Rs 7,80,000. The significant point is that one can generate this amount without making any extra effort to save.
With the additional cash that will be generated for the average taxpayer every month from April, thanks to the income tax reliefs in FY26, one can think of investing in post office schemes which offers guaranteed and predictable returns. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
