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Post Office Savings Schemes

The Post Office of India has alluring schemes for Indians to save a few extra bucks. They are offering better interest rates than a bank savings account. Post office savings schemes give guaranteed returns and they also qualify for income tax benefits under section 80C. Since post offices have a larger reach than any other financial instrument and help deepen financial inclusion in the country. Below are the list of various post office saving schemes.

Post Office Savings Account

It’s a savings account that gives 4% interest per annum with ATM facility and cheque facility. The minimum balance to be maintained is Rs 50. Interest earned on this is tax-free up to Rs 10,000. Transactions can be done through electronic mode. Both single and joint accounts can be opened.

5-Year Post Office Recurring Deposit Account (RD)

Post office RD account pays 6.9% per annum which is compounded quarterly. Minimum of Rs 10 is needed to open an account. Subsequent monthly deposits are needed to be made in multiples of Rs 5. There is a rebate given on advance deposit of at least 6 installments. There is no limit on the number of accounts be opened.

Post Office Time Deposit Account (TD)

Post office time deposits pay higher interest for deposits with longer tenure. A minimum of Rs 200 is needed to open a TD account. There is no limit to the maximum amount. The interest is paid annually but calculated quarterly. There is no limit on the number of accounts be opened. One year account pays 6.6%, 2-year account pays 6.7%, 3-year account pays 6.9% and 5-year account pays 7.4% interest.

Post Office Monthly Income Scheme Account (MIS)

MIS scheme gives 7.3% per annum but the interest is paid monthly. The minimum amount needed to open the account is Rs 1,500. Maximum of Rs 4.5lakhs can be deposited for a single account and Rs 9lakhs in case of a joint account. There is no limit on the number of accounts to be opened subject to maximum investment limit by adding balance in all accounts. Maturity period is 5 years.

Senior Citizen Savings Scheme (SCSS)

An individual who is 60 years or more can open an account. It pays 8.3% interest per annum paid quarterly. The maturity period is 5 years. One can invest only in the multiples of Rs 1,000, with a maximum limit of Rs 15 lakhs. There is no limit on the number of accounts to be opened subject to maximum investment limit by adding balance in all accounts.

15 year Public Provident Fund Account (PPF )

PPF account pays an interest of 7.6% per annum, compounded annually. An account can be opened with just Rs 100. A minimum of Rs 500 and a maximum of Rs 1,50,000 needs to be deposited in a financial year. The deposits can be made in lump sum or in 12 installments. Interest earned on this completely tax-free. Premature closure is not allowed before 15 years. Withdrawal is permissible every year from the 7th financial year from the year of opening account.

National Savings Certificates (NSC)

NSC gives an interest rate of 7.6% per annum, compounded annually but paid only on maturity. A minimum of Rs 100 is needed to open an account and there is no limit to the maximum amount. One can invest in NSC in multiples of Rs 100. The maturity is usually after 5 years from the date of deposit.

Kisan Vikas Patra (KVP )

KVP pays 7.3% interest per annum, compounded annually. A minimum of Rs 1,000 is needed to open an account and there is no limit to the maximum amount. One can invest in KVP in multiples of Rs 1000. The certificate is transferable from one person to another and from one post office to another. The money from the certificate can be withdrawn after 2.5 years from the date of issue.

Sukanya Samriddhi Accounts (SSS)

SSS is only for girl child from age of 0-10 years. It pays 8.1% interest per annum, compounded yearly basis. There is a partial withdrawal of money after the girl turns 18 and full withdrawal after she turns 21. Minimum invest is Rs 1,000 and maximum investment in a financial year is Rs 1,50,000. If minimum Rs 1000/- is not deposited in a financial year, the account will become discontinued and can be revived with a penalty of Rs 50/- per year with minimum amount required for the deposit for that year.

Post office savings schemes help you save in smaller amounts and assure guaranteed returns. For people who already have their investment portfolio in place and still have some extra bucks that they could save, then they can opt for any of these accounts. Investing in these accounts apart from the regular shares and mutual funds provide diversification to the investment portfolio. But, any day, mutual funds give higher returns than any post office savings schemes. They do not guarantee any returns but certainly, give higher returns. There is no lock-in for mutual funds and ELSS mutual funds also qualify for tax saving.

Make wise investments! Happy Investing!

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