In this article, we will cover the following topics.
1. Post Office Savings Schemes
The Post Office Saving Schemes include a bucket list of products that offer the reliability and risk free return on investment which is associated with a central government run savings portfolio. These schemes are operated via ~ 1.54 lakh post offices all over the the country. For instance, PPF is operated via 8200 branches of public sector banks in addition to the post offices in each city.
2. Savings Schemes under Post Office
1. Post Office Savings Account
2. 5-Year Post Office Recurring Deposit Account (RD)
3. Post Office Time Deposit Account (TD)
4.Post Office Monthly Income Scheme Account (MIS)
5.Senior Citizen Savings Scheme (SCSS)
6.15 year Public Provident Fund Account (PPF)
7.National Savings Certificates (NSC)
8.Kisan Vikas Patra (KVP)
9. Sukanya Samriddhi Accounts(SSA)
3. Comparison of the various Post office savings schemes
| Scheme | Interest Rate | Minimum Investment | Maximum Investment | Eligibility | Tax Implications |
| Post Office Savings Account | 4% per annum | – Rs 20
– Non Cheque Facility Rs 50 |
No limit | Resident indian , Minor and Majors | Tax free Interest upto Rs 10000 from Financial year 2012-13 |
| 5-Year Post Office Recurring Deposit Account | 6.9% per annum (compounded Quarterly) | Rs 10 per month | No Limit | Individual | Tax benefit upto 5 years under section 80 C on deposits |
| Post Office Time Deposit Account (TD) | First year – 6.6% pa
Second year -6.7% pa Third Year – 6.9% pa Fourth Year – 7.4% pa |
Rs 200 | No limit | Individual | Tax benefit upto 5 years under section 80 C on deposits |
| Post Office Monthly Income Scheme Account (MIS) | 7.3 % per annum (compounded Annually) | Rs 1500 | For one account holder Rs 4.5 lacs and joint account holders Rs 9 lacs | Individual | Interest earned is Taxable & No deduction under Sec 80C for Deposits made. |
| Senior Citizen Savings Scheme (SCSS) | 8.3 % per annum (compounded Annually) | Rs 1000 | Maximum deposit over lifetime allowed at Rs 15 lacs | Individual of age> 60 years or age >55 years who have opted for VRS or Superannuation | – Tax rebate under section 80 C for deposits
– TDS to be deducted on interest earned for more than Rs 10000 pa |
| 15 year Public Provident Fund Account (PPF) | 7.6 % per annum (compounded Annually) | Rs 500 per financial year | Rs 1.5 lacs per financial year | Individual | Tax rebate under section 80 C for deposits (maximum Rs 1.5 lacs pa |
| National Savings Certificates (NSC) | 7.6 % per annum (compounded Annually) | Rs 100 | No Limit | Individual | Tax rebate under section 80 C for deposits (maximum Rs 1.5 lacs pa |
| Kisan Vikas Patra (KVP) | 7.3 % per annum (compounded Annually) | Rs 1000 | No limit | Individual (Adult) | Interest is taxable but no tax on amount received on maturity |
| Sukanya Samriddhi Accounts | 8.1 % per annum (compounded Annually) | RS 1000 per financial year | Rs 1.5 lacs per financial year | Girl Child – Upto 10 years from birth and 1 additional year of grace | Investment (upto Rs 1,5 lacs exempt under Section 80C), interest and Amount received on maturity is tax free |
4. Advantages of PO Saving Schemes in India
a. Easy to invest
The saving schemes are easy to enroll with and are perfectly suited for the rural and the urban investor who wants to hedge the risk in the portfolio for a fixed decent return. Their simplicity and availability makes these a much preferred savings option.
b. Simple procedure to enroll
Limited documentation and proper procedures in post office ensures that these saving schemes are simple to opt for and safe to be locked onto which is also backed by the government
c. Investments for long-term
The investments are more forward and long term looking with the investment period ranging upto 15 years for PPF account . Helps in retirement and pension planning for a simple individual as well
d. Tax exemption
Most of the schemes come in with tax rebates under section 80C for the deposit amount and few of the schemes like PPF , SCSS , Sukanya Samriddhi also have the interest earned amount exempt.
e. Risk-free & competent interest rates
Interest rates range from 4% to 9% which is totally risk free and gives good return. Less risk as this is an undertaking by the government.
f. Different buckets of products
There are different range of products based on different types of individuals. Public Provident Fund (PPF), Kisan Vikas Patra and Sukanya Samriddhi Yojana are some of the more known schemes.
Government has made these small savings schemes available via post offices to provide safe investment avenue for the public. By giving them goods returns while keeping their money safe, these schemes are easy to manage. If the features and benefits iterated above meet your financial goals, invest in a post office savings scheme.
