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Indian Post Office Saving Schemes

The Post Office Savings scheme refers to a range of saving products portfolio offered by the central government. Since it has the backing of the central government, they are preferred by people who have less appetite for risks and want a secure return on their investment.

The scheme is run via 1.54 Lakh post offices all over the country. In certain schemes, public sector banks are also involved. For example, PPF in addition to be operated by post offices in each city is managed by 8200 branches of public sector banks.

The Post Office savings scheme portfolio consists of the following:

  • Post Office Savings Account
  • National Savings Recurring Deposit Account
  • National Savings Time Deposit Account
  • National Savings Monthly Income Account
  • Senior Citizens Savings Scheme Account
  • Public Provident Fund Account
  • National Savings Certificates (VIII Issue) Account
  • Kisan Vikas Patra Account
  • Sukanya Samriddhi Account
Post Office Saving Schemes – Interest Rates & Tax Implications

The following table discusses different Post office saving schemes and various factors and eligibility criteria associated with them like return on investment, minimum and maximum investment, tax implications, eligibility to invest in such scheme, etc.

Scheme Interest Rate Minimum Investment Maximum Investment Eligibility Tax Implications
Post Office Savings Account 4.0% per annum on individual/joint accounts – Minimum INR 20/- for opening

– Minimum balance to be maintained in a non-Cheque facility account is INR 50/-
No maximum limit Indian residents both minor and adults can invest in this scheme Interest earned is Tax Free up to INR 10,000/- per year from financial year 2012-13
National Savings Recurring Deposit Account 7.2 % per annum (quarterly compounded) Minimum INR 10/- per month or any amount in multiples of INR 5/- No maximum limit You can only invest in your Individual capacity Tax benefit under section 80 C on deposits for up to 5 years.  
National Savings Time Deposit Account – Interest offered  for 1 year – 6.6% pa

– Interest offered  for 2 year -6.9% pa

– Interest offered for 4 Year – 6.9% pa

– Interest offered for 5 Year – 7.7% pa
Minimum INR 100/- and in multiple thereof. No maximum limit You can only invest in your Individual capacity Investment under 5 Years TD qualifies for the benefit of Section 80C of the Income Tax Act
National Savings Monthly Income Account From 01.07.2019, interest rate is 7.6 % per annum In multiples of INR 100/- – Maximum investment limit is INR 4.5 lakh in single account and INR 9 lakh in joint account

 

– An individual can invest maximum INR 4.5 lakh in MIS (including his share in joint accounts)
 You can only invest in your Individual capacity The interest earned will be taxed for this scheme as it makes no provisions for tax rebate under Sec 80C
Senior Citizen Savings Scheme (SCSS) 8.6 % per annum, payable from the date of deposit of 31st March/30th Sept/31st December in the first instance & thereafter, interest shall be payable on 31st March, 30th June, 30th Sept and 31st December. INR 1,000/- Maximum not exceeding INR 15 lakh. – An individual of the Age of 60 years or more may open the account.

 

– An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits.
– Tax deduction allowed for deposits section 80 C

– TDS is deducted at source on interest if the interest amount is more than INR 10,000/- p.a.
Public Provident Fund Account (PPF) 7.9 % per annum (compounded yearly) – INR 500 per financial year

 

– Deposits can be made in lump-sum or in 12 installments.
– Maximum INR. 1,50,000/- in a financial year

 
You can only invest in your Individual capacity – Tax rebate under section 80 C for deposits

 

– Interest is completely tax-free

 

– Loan facility available from 3rd financial year.
National Savings Certificates (NSC)

 

5 Years National Savings Certificate (VIII Issue)
7.9 % compounded annually but payable at maturity. Minimum of Rs. 100/- and in multiples of Rs. 100/- No Maximum Limit You can only invest in your Individual capacity Tax rebate allowed under section 80 C for deposits (maximum INR 1.5 lakh per annum
Kisan Vikas Patra (KVP ) Account
 
– 7.6 % compounded annually

Amount

 

 – Invested doubles in 113 months (9 years & 5 months)
Minimum of Rs. 1000/- and in multiples of Rs. 1000/- No Maximum Limit Only Adults can invest in their individual capacity Interest earned will be taxed but the amount received on maturity will be tax free.
Sukanya Samriddhi Account Rate of interest 8.4% Per Annum, calculated on yearly basis, Yearly compounded. – Minimum INR. 250/-

 

– If minimum Rs 1000/- is not deposited in a financial year, account will become discontinued and can be revived with a penalty of Rs 50/- per year with minimum amount required for deposit for that year.
Maximum INR. 1,50,000/- in a financial year Scheme open only to a Girl Child – Up to 10 years from birth with one year of grace. Interest earned on investment up to INR 1.5 under Section 80 C is tax free.  Both interest and total amount received on maturity is tax free

Advantages of Post Office Saving Schemes

Post Saving schemes offer fixed return with absolutely no risk. Some of the important benefits of PO saving schemes are mentioned as following:

Investment in Post Office Schemes

It is extremely easy to invest in Post office schemes which make them ideal investment instrument for people of both urban and rural India who want a decent risk-free return on their investment.

Minimal Documentation

These schemes are easy to enroll in as they require simple procedures and minimal documentation.

Long term investment

These saving schemes are generally forward looking with maturity period as long as 15 years. This greatly helps a person plan for his retirement and pension.

Exempted from tax

Majority of post saving accounts come with provision for tax exemptions under Section 80C for deposit amounts. And for few like SCSS , Sukanya Samriddhi, etc, holders have to pay no taxes on interest earned.

Free from risk

Interest rate offered ranges from 4 to 9 per cent. The best thing is that the interest rate is guaranteed with zero per cent risk as it is backed by central government.

A Whole Bucket of Portfolio to Choose From

As mentioned above, there are many different types of saving schemes with different interest rates, tax rules, investment requirement, etc. This offers you the benefit of choosing one that most closely aligns with your needs and requirements.

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