The lower and middle-class people prefer to deposit their hard-earned money in post office saving schemes as these are safer avenues for investments and easily accessible, especially in rural areas. Post offices have a Senior Citizens Saving Scheme (SCSS) which help to save as well as avail deductions under Section 80C of the Income Tax rules. Reportedly, till March 2019, the interest amount on a deposit of Rs 15 lakh (the permitted amount per year) was Rs 32,000 per quarter but since April 2020 the interest is Rs 26,000. This is a double whammy because firstly the interest accrued is taxed and secondly the drastic reduction of Rs 6,000 per quarter translates to a whopping Rs 24,000 in a year, a princely amount for anyone. The central government blamed the falling economy on the pandemic and hence the need to reduce the interest rates in the post office accounts. But the government has crores of rupees to spend on panchayat, zilla parishad, municipality, state and national elections. These are continuing events, somewhere or the other in India. The government should forego taxing the interests obtained from banks and post offices or increase the interest exemption limit. Further, the interest rates could be marginally increased to partially offset the loss to the depositors. Monetarily, the government’s interest should be to save the people’s principle and people’s principle should be to obtain a better interest.
