In this article, we have covered various investment options offered by the post office and their benefits.
1. Post Office Investment-Savings Schemes
The Post Office Saving Schemes include several products that offer reliability and risk-free returns on investment. These schemes are operated via 1.54 lakh post offices spread all over the country. For example, the PPF scheme; 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 Investments
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 (p.a.) |
–Rs 20 –Non-cheque facility – Rs 50 |
No limit |
Resident Indian, minor and majors |
Tax-free interest up to Rs 50,000 from the financial year 2018-19 |
|
Post Office Time Deposit Account (TD) |
First year – 6.9% p.a. Second year – 6.9% p.a. Third Year – 6.9% p.a. Fourth Year – 7.7% p.a. |
Rs 200 |
No limit |
Individual |
Tax benefits up to 5 years under section 80C on deposits |
|
Post Office Monthly Income Scheme Account (MIS) |
7.6% per annum payable monthly |
Rs 1,500 |
For one account holders – Rs 4.5 lakh Joint account holders – Rs 9 lakh |
Individual |
Interest earned is taxable and no deduction under Sec 80C for deposits made. |
|
Senior Citizen Savings Scheme (SCSS) |
8.6% p.a. (Compounded annually) |
Rs 1,000 |
Maximum deposit over the lifetime allowed at Rs 15 lakh |
Individual of age> 60 years or age >55 years who have opted for VRS or superannuation |
– Tax benefit under section 80C for deposits – TDS to be deducted on interest earned for more than Rs 50,000 p.a. |
|
15-year Public Provident Fund Account (PPF) |
7.9% p.a. (Compounded annually) |
Rs 500 per financial year |
Rs 1.5 lakh per financial year |
Individual |
Tax rebate under section 80C for deposits (maximum Rs 1.5 lakh p.a.) |
|
National Savings Certificates (NSC) |
7.9% p.a. (Compounded annually) |
Rs 100 |
No limit |
Individual |
Tax rebate under section 80C for deposits (maximum Rs 1.5 lakh p.a.) |
|
Kisan Vikas Patra (KVP) |
7.6% p.a. (Compounded annually) |
Rs 1,000 |
No limit |
Individual (Adult) |
Interest is taxable but no tax on the amount received on maturity |
|
Sukanya Samriddhi Accounts |
8.4% p.a. (Compounded annually) |
Rs 1,000 per financial year |
Rs 1.5 lakh per financial year |
Girl Child – up to 10 years from birth and one additional year of grace |
Investment (up to Rs 1.5 lakh exempt under Section 80C), interest and amount received on maturity is tax free |
4. Advantages of the Post Office Investment- Saving Schemes in India
a. Easy to invest
The saving schemes are easy to enrol and are best suited for both rural and urban investors. Anyone who wants to hedge risk in the portfolio for a fixed decent return can invest in these schemes. The simplicity and availability make these investment options a much-preferred savings cum investment option.
b. Limited documentation and proper procedures in post office ensure that these saving schemes are simple to opt for and safe to be locked onto as the government backs them.
c. The investments in the Post Office Schemes are more forward-looking and long-term oriented with the investment period extending up to 15 years for a PPF account. Therefore, these investment options are an excellent option for retirement and pension planning.
d. Tax exemption
d. Tax exemption
Most of these schemes are eligible for tax rebates under Section 80C for the deposit amount. Few of the schemes like the PPF, the SCSS, the Sukanya Samriddhi Yojana, etc. also have the interest earned amount exempted from taxation.
e. Interest rates in these schemes range from 4% to 9%, which is also risk-free. There is a minimal amount of risk involved, as the Government of India undertakes these investment options.
f. Different buckets of products
There is a wide 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 well-known schemes.
The government has made these small savings schemes available via post offices to provide a safe investment avenue for the public. By providing them with good returns and keeping their investments safe, these schemes are easy to manage. If the features and benefits iterated above meet your financial goals, then invest in a post office savings scheme to secure your financial future at minimal risk.
