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Dating back to the British Era, India Post is one of the oldest organisations in the country. While it started off with just postal services, India Post has now diversified its range of services provided to its customers. You can now avail insurance and a variety of post office savings schemes by simply visiting the nearest branch. 

 

Since India Post is backed by the government of India, all of its investment plans deliver guaranteed returns and are free from any kind of risk. Depending on the post office scheme, you also stand to gain tax-saving benefits under section 80C of the Income Tax Act, 1961 to the tune of ₹1.5 Lakhs in a financial year. 

Post Office Savings Schemes and Interest Rates

The interest rates for post office deposit schemes are set by the government of India. These rates are reviewed periodically and are subject to change from time to time. Here’s a quick look at the different savings plans offered by India Post and the current rate of interest for each of them. 

Post Office Saving Schemes

Interest Rate

Period of Investment

Minimum Investment

Maximum Investment

Eligibility

Tax Implications

Post Office Savings Account

4.0% per annum 

N/A

₹500

No maximum limit

All Individuals, including minor individuals

Interest exemption up to ₹10,000 in a financial year

Post Office Recurring Deposit (RD)

5.8% per annum 

5 years

₹100 per month

No maximum limit

All Individuals, including minor individuals

Interest is fully taxable 

Post Office Time Deposit (TD) 1-3 year tenor

1-year - 5.5% per annum 


2-years - 5.7% per annum 


3-years - 5.8% per annum 

1-3 years

₹1,000

No maximum limit

All Individuals, including minor individuals

Interest is fully taxable 

Post Office Time Deposit (TD) 5-year tenor

6.7% per annum 

5 years

₹1,000

No maximum limit

All Individuals, including minor individuals

Section 80C deduction to the tune of ₹1.5 Lakhs in a financial year

Post Office Monthly Income Scheme (MIS)

6.7% per annum 

5 years

₹1,000

₹4.5 Lakhs in a single account 


₹9 Lakhs in a joint account

All Individuals, including minor individuals

Interest is fully taxable 

Post Office Senior Citizens Savings Scheme (SCSS)

7.6% per annum 

5 years

₹1,000

₹15 Lakhs

Individuals above 60 years of age 


In the case of individuals who opted for superannuation or VRS, above 50 years of age 

Section 80C deduction to the tune of ₹1.5 Lakhs in a financial year


If the interest earned during a financial year exceeds ₹50,000, TDS of 10% is deducted

Kisan Vikas Patra (KVP)

7.0% per annum 

Prescribed from time to time 

₹1,000

No maximum limit

All Individuals, including minor individuals

Section 80C deduction to the tune of ₹1.5 Lakhs in a financial year

Public Provident Fund (PPF)

7.1% per annum 

15 years 

₹500

₹1.5 Lakhs in a financial year

All Individuals, including minor individuals

Section 80C deduction to the tune of ₹1.5 Lakhs in a financial year


Interest earned under this plan is tax-free

Sukanya Samriddhi Account (SSA)

7.6% per annum 

21 years from the date of account opening

₹250

₹1.5 Lakhs in a financial year

Girl children below the age of 10; the account should be opened by the guardian in the name of the girl child

N/A

National Savings Certificate (NSC)

6.8% per annum 

5 years 

₹1,000

No maximum limit

All Individuals, including minor individuals

Section 80C deduction to the tune of ₹1.5 Lakhs in a financial year

Note: The interest rates mentioned above are with effect from October 01, 2022 to December 31, 2022 and are subject to change from time to time. 

Post Office Savings Account

  • A post office savings account is very similar to the savings account that you hold with a bank. 

  • You get to earn an interest of 4% per annum on your savings account balance. This interest is fully taxable; however, TDS on the interest will not be deducted. 

  • There’s a minimum balance that you would have to maintain to keep your post office savings account active. In the case of an account with no cheque book facility, the minimum balance requirement is ₹50. On the other hand, for an account with the cheque book facility, the minimum balance requirement is ₹500. 

  • The interest that you earn from this post office scheme is eligible for deduction of up to ₹10,000 per financial year under section 80TTA of the Income Tax Act, 1961.

5-Year Post Office Recurring Deposit Account (RD)

  • The post office recurring deposit plan comes with a fixed tenor of 5 years, with the interest being compounded on a quarterly basis. 

  • You can invest as low as just ₹100 per month, making this one of the best postal saving schemes currently available.

  • A penalty of ₹1 for every ₹100 will be levied in the case of missed payments. 

  • Up to 50% of the balance in the RD account can be partially withdrawn after 1 year from the date of account opening. 

Post Office Time Deposit Account (TD)

  • The post office time deposit plan is very similar to a bank fixed deposit. The tenor ranges from 1-year to 5 years. 

  • The minimum amount of investment that you can make in this avenue is ₹1,000. There’s no cap on the maximum amount that you can invest.

  • The post office time deposit can be pledged as collateral to avail loans from financial institutions. 

Post Office Monthly Income Scheme Account (MIS)  

  • The Monthly Income Scheme is one of the few post office investment schemes that are designed to offer a steady stream of income each month. 

  • The minimum amount that you can invest is ₹1,000, whereas the maximum amount is ₹4.5 Lakhs in the case of a single account and ₹9 Lakhs in the case of a joint account. 

  • The tenor of the scheme is 5 years and the account can be transferred from one post office branch to another. 

Senior Citizens Savings Scheme (SCSS)    

  • The post office senior citizens savings scheme is exclusively for individuals above 60 years of age. Retired individuals from the defence sector, aged above 50 years, can also invest in the scheme. 

  • The interest from this investment scheme is paid out on a quarterly basis. 

  • The minimum amount of investment is ₹1,000, whereas the maximum amount is ₹15 Lakhs. 

  • Premature withdrawal is possible; however a small penalty will be levied based on when you withdraw. 

Public Provident Fund Account (PPF)   

  • One of the best post office saving plans that individuals including minors can invest in, PPF has a low minimum investment amount of just ₹500. The maximum amount that you can invest in a year is ₹1.5 Lakhs. 

  • PPF has a lock-in period of 15 years, after which, the funds can either be withdrawn or the tenor be extended by blocks of 5 years. 

  • The interest earned on PPF investments are tax-free. To get to know how much interest your investment is likely to earn, you can use a PPF calculator

  • The contributions made to the account are eligible for deductions under section 80C of the Income Tax Act, 1961 to the tune of ₹1.5 Lakhs in a financial year. 

National Savings Certificate (NSC)

  • The National Savings Certificate is a post office scheme with a tenor of 5 years. 

  • The minimum amount of investment in the plan is ₹1,000, with no maximum limit on the investment. 

  • You can claim the amount invested in NSC as deductions under section 80C of the Income Tax Act, 1961 to the tune of ₹1.5 Lakhs in a financial year. 

  • The NSC can also be pledged as collateral to avail loans from financial institutions. 

Kisan Vikas Patra (KVP)   

  • Kisan Vikas Patra doesn’t have a fixed tenor. Instead, the deposit will mature on the date prescribed by the Ministry of Finance at the time of opening the account.

  • The amount invested in KVP will double in 123 months. The current KVP interest rate is 7% per annum. 

  • As with other post office savings schemes, the minimum amount of investment is ₹1,000, with no cap on the maximum amount of investment. 

Sukanya Samriddhi Accounts (SSA)

  • Designed for girl children below 10 years of age, the Sukanya Samriddhi Account offers a high rate of interest. 

  • The minimum amount of investment is ₹250, with the maximum limit set at ₹1.5 Lakhs per financial year. 

  • The amount received by the girl child upon maturity is completely tax-free and the contributions made to an SSA is eligible for section 80C deductions to the tune of ₹1.5 Lakhs per financial year.

Post Office v/s Other Saving Schemes

There are many points of differences between post office savings schemes and other savings schemes offered by financial institutions. Here’s a quick look at a few of them.

 

  • The interest rates offered by India Post tends to be around 4% per annum to 7.6% per annum. The interest rates on other savings schemes like bank FDs and RDs range from 4% per annum to 8% per annum.  

  • All postal savings schemes are guaranteed by the government of India and are therefore risk-free. However, other savings schemes may not be entirely risk-free and tend to carry a certain amount of risk. 

  • Many post office savings schemes offer tax benefits in the form of deductions under section 80C; the interest payments on some of them are also tax-free. In the case of other savings schemes, you will not only have to pay tax on the interest, but also be ineligible for tax benefits. 

  • The Monthly Income Scheme (MIS) and Senior Citizens Savings Scheme (SCSS) are designed to offer you a steady source of income. Other savings schemes may not offer this feature. 

Advantages of Post Office Savings Account

There are many benefits that you get to enjoy by opening a savings account at a post office. Let’s take a quick glimpse into some of them. 

 

  • Simple Account Opening Process 

Opening a savings account is very easy and shouldn’t take more than a few minutes. All that you need to do is submit a filled application form along with the necessary documents at the nearest post office branch.

 

  • Easy Accessibility 

If you’ve subscribed to the internet banking feature, you can access your savings account online from the comfort of your own home. 

 

  • Risk-Free 

Since all the deposits in a post office savings account are backed by the government of India, there’s virtually zero investment risk involved. 

 

  • Attractive Interest Rates 

The interest rate offered by India Post on its savings account is very attractive and is far higher than most banking institutions.

Process to Apply for Post Office Savings Schemes

Wondering how to go about applying for the various post office saving plans? Here’s a step-by-step guide to help you out. 

 

  • Step 1: Visit a post office branch that’s nearest to you. 

  • Step 2: Request for the account opening form based on the savings scheme that you wish to open. Alternatively, you can download the respective application form online from the website of India Post. 

  • Step 3: Fill the form, sign it, and submit the same at the respective counter along with all the other necessary documents. 

  • Step 4: Submit a cheque or demand draft for the amount of investment that you wish to make. 

That’s it. Your post office savings scheme will be opened within a few days and a physical passbook for the same will also be provided to you. 

Required Documents for Post Office Savings Schemes 

Irrespective of the kind of deposit scheme you wish to open, you would have to submit a few documents as part of the application process. Here’s a quick overview of the list of documents. 

 

  • Application Form 

  • Know Your Customer (KYC) Form 

  • A copy of your PAN 

  • A copy of your identity proof - Aadhaar, Driving Licence, Passport, or Voter ID

  • A copy of your address proof - Aadhaar, Passport, Driving Licence, or Voter ID 

Schedule of Fee

India Post has prescribed a schedule of fees that are applicable for all post office saving schemes. Check out the table below to get an idea of the fees and charges. 

Schedule of Charges 

Amount 

Duplicate Passbook 

₹50

Deposit Receipt and Statement of Account

₹20

Passbook in lieu of mutilated or lost certificate

₹10 per registration 

Nomination change or cancellation 

₹50

Account Transfer Charges

₹100

Account Pledging Charges

₹100

Cheque Book Issue

Up to 10 cheque leaves in a year - Free 


More than 10 cheque leaves in a year - ₹2 per leaf

Dishonour of Cheque 

₹100

Note: All of the amounts prescribed in the above table are exclusive of GST. 

Conclusion

As you can clearly see, post office savings schemes are among the best investment options available right now. By investing in them, you not only get to grow your money, but can also save tax. That said, before you choose the scheme that you wish to invest in, always make sure to read through the various terms and conditions associated with it. This will help you make a much better investment decision. 

FAQs on Post Office Savings Account

  • ✔️How can I invest in the Post Office Monthly Income scheme?

    To invest in the Post Office Monthly Income Scheme (MIS), you would have to first open an MIS account. Once you’ve opened it, you can proceed to invest up to ₹4.5 Lakhs if it is a single account. In the case of a joint account, you can invest up to ₹9 Lakhs.

  • ✔️Can I withdraw money from any post office?

    Yes. You can visit any of the post office branches in India to withdraw money from your account. 

  • ✔️How much money can I withdraw from the post office account?

    In the case of withdrawals at the branch, the maximum amount is capped at ₹10,000 per day. However, if you’re withdrawing cash from an ATM, the maximum amount of withdrawal is ₹25,000 per day.

  • ✔️Can I check my post office account online?

    Yes. If you’re registered for internet banking, you can access your post office account online at any time.

  • ✔️Is post office investment safe and tax-free?

    Yes. All post office savings schemes are backed by the government of India and are therefore free from any risk. As far as tax on interest is concerned, only a few schemes enjoy tax-free status. 

  • ✔️Is there any post office scheme for students?

    There are no post office investment schemes exclusive for students. However, students, including minors, can invest in any of the various post office savings schemes except the Senior Citizens Savings Scheme (SCSS). 

  • ✔️Which post office scheme is suitable for 5 years?

    There are many post office savings plans with a tenor of 5 years. The list includes Post Office Recurring Deposit, Post Office Time Deposit, Post Office Monthly Income Scheme (MIS), Senior Citizens Savings Scheme (SCSS) and National Savings Certificate (NSC).

  • ✔️Is it possible to transfer money from the post office to a bank account?

    Yes. You can transfer funds from your post office account to your bank account. You can do that by physically visiting a post office near you or initiate an electronic transfer through your post office internet banking account.