Post office is one of the oldest organizations in India which started way back during the British era in Oct 1854, initially focusing only on delivering mail (post) and later started providing an array of other financial services i.e., Banking, Insurance & Investments. The biggest advantage of these schemes is their sovereign guarantee i.e., it is backed by the government. Some of the post office savings schemes also offer tax-savings benefits U/S 80C of the Income Tax Act. Below is a list of such schemes with their applicable Interest rates: –
|Scheme||Interest Rate (Updated)||Minimum Investment (Rs)||Maximum Investment||Eligibility||Tax Implications|
|Post Office Savings Account||4%||500||No limit||Individuals including Minors||Exempted Interest up to ₹10,000|
|National Savings Recurring Deposit Account||5.8%||100 per month in multiples of 10||No limit||Individuals including Minors||–|
|National Savings Time Deposit Account||5.5% – 6.7%||1,000 and multiples of 100||No limit||Individuals including minors||Section 80C deduction on deposits for 5 Years|
|National Savings Monthly Income Account||6.6% p.a. payable monthly||1,000||Max Rs 4.5 lakh for single A/C and Rs 9 lakh for Joint A/C||Individual including minors||The interest you earn is taxable and there are no deductions on the deposits, as per Sec 80 C|
|Senior Citizen Savings Scheme Account||7.4% p.a. (Compounded Annually)||1,000||Max Rs 15 lakh||Persons more than 60 years of age and above 50 years of age who have taken VRS or superannuation.||There are tax benefits on scheme deposits as per Sec 80 C
TDS is deducted if the interest earned is more than Rs 50,000
Interest taxable if more than Rs 50,000
|Public Provident Fund Account (PPF)||7.1% p.a. (Compounded Annually)||500||Max 1.5 lakh per financial year||Individual and minors||Tax relief available under section 80C for deposits
Interest earned is tax-free
|National Savings Certificates (NSC)||6.8% p.a. (Compounded Annually) but payable at maturity||1,000||No Limit||Individual and minors||Deposits qualify for tax exemption under 80C|
|Kisan Vikas Patra Account||6.9% p.a. (Compounded Annually)||1,000||No limit||Individual and minors||The interest is taxed but the amount received upon maturity is tax-free|
|Sukanya Samriddhi Account||7.6% p.a. (Compounded Annually)||250||Max 1.5 lakh per financial year||To be opened in the name of the girl child by the guardian||–|
Post Office Savings Account – It acts as a normal savings account of any bank and the account is transferable from one post office to another.
National Savings Recurring Deposit Account – The Scheme helps the small/poor investors to form a corpus to meet their future needs. An account is either opened by an adult or by two adults jointly.
National Savings Time Deposit Account – There is a tax benefit for the investment made in the 5 year post office time deposit. The investment qualifies for the deduction under Section 80C of The Income Tax Act, 1961.
National Savings Monthly Income Account – This is a scheme in which investors contribute a certain amount and earn a fixed interest every month.
Senior Citizen Savings Scheme Account – The Scheme is a savings instrument offered to Indian residents aged over 60 years. The deposit matures after 5 years from the date of account opening but can be extended once by an additional 3 years by the investor.
Public Provident Fund Account – Public Provident Fund is a long-term investment scheme declared by the Government of India. It is a safe post office deposit scheme that offers tax exemptions and attractive interest rates as decided each financial year.
National Savings Certificate (NSC) – The Scheme is a fixed income investment scheme that one can open with a post office. As part of an initiative from the Government of India, it is a savings bond that encourages subscribers, primarily small or mid-income investors, to invest while saving on income tax.
Kisan Vikas Patra Account – Kisan Vikas Patra is a certificate scheme from the post office. It may actually double as a one-time investment in a period of approximately 9 years & 10 months.
Sukanya Samriddhi Account – SSY is a savings scheme launched by the Government of India, for the financial betterment of the girl child. The scheme enables parents to build capital for the future education and marriage expenses of their female child and provides an attractive interest rate on the investment.
The following steps can enable you to easily apply for a post office saving scheme:4
Step 1: Vist the closest post office branch.
Step 2: Get the form to open the relevant account from the post office. However, you can also download the form online from the official portal of the Indian Post Office.
Step 3: Fill in the form with the needed details and submit it along with the KYC proof. You will also have to give other documents as required.
Step 4: Finish the process of enrolment by depositing the amount of the scheme you chose.
Post office saving schemes are easy to enrol in and require limited documentation as simple procedures in post offices ensure that these saving schemes are safe investment tools and provide a fixed return as they are backed by the government.
These schemes are best suited for the rural and the urban investors as Post offices are in every corner of the country. To cater to the uneducated and rural population, these are simple and thus make these a much-preferred savings option.
The investments in the Post Office Schemes are more future and long-term oriented as it can be the best retirement or pension plan with the investment period extending up to 15 years for a PPF account. With this kind of Investment scheme, an investor can diversify his/her portfolio for a risk-free and fixed return.
Interest rates in post office savings schemes range from 4% to 8% which is also risk-free and highly competitive with Banks. There is a minimal amount of risk involved as this is regulated by the Government of India.
The Post Office of India provides suites of different products to cater to different investor grades. The products on offer vary with tax implications, investment horizons and expected return as per the requirements of the investor.
Q1. Which post office scheme is suitable for 5 years?
The 5-Year Post Office Recurring Deposit Account (RD).
Q2. Is it possible to invest in the Post Office without paying taxes?
Yes, most of the post office’s savings schemes give tax deductions of up to Rs 1.5 lakh on investment under Section 80 C of the Income Tax Act. Some plans, however, such as the Post Office Monthly Income Scheme and the Post Office Recurring Deposit, do not provide a tax rebate.
Q3. Is there a Post Office Scheme available to students?
Yes, students over the age of 18 can invest in the post office’s savings programmes. SSY, or Sukanaya Samriddhi Yojana, is a post office investment scheme in which parents or legal guardians can invest for their girl child aged 10 years or less.
Q4. What is the maximum amount of money I can withdraw from my post office account?
India Post has doubled the withdrawal limit at Post Office GDS (Gramin Dak Seva) branches for post office account holders.
Q5. Is it possible to transfer money from the post office to my bank account?
To make a transfer with the Post Office, you can go to one of their physical locations (which could be an independent Post Office or part of another store) or utilise their online service on the Post Office website. You have the option of picking up the money in cash or having it delivered to your bank account.