Post Office Saving Schemes

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. 

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. 

• 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.

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• Up to 50% of the balance in the RD account can be partially withdrawn after 1 year from the date of account opening. 

• 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. It is important to know the returns that you will receive when you invest, therefore you can make use of the fixed deposit interest rates calculator that is available on Bajaj Markets.

• 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. 

• 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. 

• 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. 

• 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 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. 

• 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.

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.

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. 

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 

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. 

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

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.