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Post Office Saving Schemes – Overview, Plans & Benefits

Updated on:  

08 min read

In this article, we have covered various investment options offered by the post office and their benefits.

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.

Savings schemes under Post Office investments 

Post Office Savings Account

The minimum deposit to open a Post Office Savings Account is Rs.500. The account can be opened in single or joint ownership by domestic customers. An interest rate of 4% p.a. Is applicable to the deposits. You can avail of a cheque book, ATM card, e-banking and mobile banking services, and other services with the account on request.

5-Year Post Office Recurring Deposit Account (RD)

As the name suggests, the tenure of this RD account is fixed for five years. You can agree to a fixed monthly deposit payment starting from Rs.100 and earn interest at 5.8% p.a. The interest gets compounded quarterly. You can get a loan of up to 50% against the deposit you have already made in the account after completing 12 instalments without defaulting.

Post Office Time Deposit Account (TD)

There are four possible tenures for Post Office Time Deposit Accounts you can choose from, i.e. 1 year, 2 years, 3 years, and 5 years. The minimum deposit allowed in this account is Rs.1,000. The interest is calculated quarterly but is payable on an annual basis. For a tenure of up to 3 years, the rate is 5.5% p.a. and it is 6.7% p.a. for a 5-year tenure.

Post Office Monthly Income Scheme Account (MIS)

You can deposit a sum of Rs.1,000 up to Rs.4.5 lakh in a single account and up to Rs.9 lakh in a joint account. An interest rate of 6.6% p.a. can be earned through this account. You can get monthly fixed income from the scheme. You cannot prematurely close the account before completing one year. Premature closure beyond one year can attract penalties.

Senior Citizen Savings Scheme (SCSS)

This is a government-backed retirement scheme that allows you to make a deposit of a lump sum in one instalment. The deposit can range from Rs.1,000 up to Rs.15 lakh. The scheme offers an interest rate of 7.4% p.a. Individuals above the age of 60 years are eligible to open this account.

Retired civilian employees aged between 55 years and 60 years and retired defence employees aged between 50 years and 60 years of age can also open the account subject to investing the retirement benefits within one month from the date of receipt of the benefits.

15-Year Public Provident Fund Account (PPF)

Many salaried individuals prefer PPF as an investment and retirement tool as the scheme offers income tax deductions up to Rs.1.5 lakh per financial year. The minimum deposit required to open the account is Rs.500 and the upper limit is Rs.1.5 lakh.

Though the tenure of the account is 15 years, you only have to pay Rs.500 per financial year to keep the account active. An interest rate of 7.1% p.a. is offered by the scheme. The interest is compounded yearly. Also, the interest earned on this account is tax-free.

National Savings Certificates (NSC)

NSC comes with a tenure of five years where you need to make a minimum deposit of Rs.1,000. There is no maximum deposit defined for this account. With an interest rate of 6.8% p.a., the interest gets compounded annually and is paid out only at maturity.

An individual can open any number of accounts under the scheme. The certificate can be pledged or transferred as security to the housing finance company, banks, government companies, and others.

Kisan Vikas Patra (KVP)

The attraction of this scheme is that over the tenure of the account, your investment will be doubled. The minimum deposit for this account is Rs.1,000. As per the rates applicable to quarter 4 of the fiscal year 2020-21, the applicable interest rate is 6.9% p.a. And the tenure of the account is 124 months (10 years and 4 months). Please note that the tenure of the account varies with the variation in the interest rate.

Sukanya Samriddhi Accounts (SSA)

This is a government scheme dedicated to the financial well-being of the girl child. Only girl children below the age of 10 years are eligible to get the benefits of this account. The account must be opened and operated by parents or guardians.

The minimum deposit required is Rs.250 and a max of Rs.1.5 lakh per financial year. An interest rate of 7.6% p.a. Is applicable. The interest is calculated on a yearly basis and compounded annually. The guardian can operate the account until the girl child attains 18 years of age. The deposit can be made for a maximum of 15 years from the date of opening the account.

Comparison of the various Post office savings schemes 

SchemeInterest RateMinimum InvestmentMaximum InvestmentEligibilityTax Implications
Post Office Savings Account4% per annum (p.a.)–Rs 20 –Non-cheque facility – Rs 50No limitResident Indian, minor and majorsTax-free interest up to Rs 50,000 from the financial year 2018-19
Post Office Time Deposit Account (TD)First year – 5.5% p.a. Second year – 5.5% p.a. Third Year – 5.5% p.a. Fourth Year – 6.7% p.a.Rs 200No limitIndividualTax benefits up to 5 years under section 80C on  deposits
Post Office Monthly Income Scheme Account (MIS)6.6% per annum payable monthlyRs 1,500For one account holders – Rs 4.5 lakh Joint account holders – Rs 9 lakhIndividualInterest earned is taxable and no deduction under Sec 80C for deposits made.
Senior Citizen Savings Scheme (SCSS)7.4% p.a. (Compounded annually)Rs 1,000Maximum deposit over the lifetime allowed at Rs 15 lakhIndividual 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)7.1% p.a. (Compounded annually)Rs 500 per financial yearRs 1.5 lakh per financial yearIndividualTax rebate under section 80C for deposits (maximum Rs 1.5 lakh p.a.)
National Savings Certificates (NSC)6.8% p.a. (Compounded annually)Rs 100No limitIndividualTax rebate under section 80C for deposits (maximum Rs 1.5 lakh p.a.)
Kisan Vikas Patra (KVP)6.9% p.a. (Compounded annually)Rs 1,000No limitIndividual (Adult)Interest is taxable but no tax on the amount received on maturity
Sukanya Samriddhi Accounts7.6% p.a. (Compounded annually)Rs 1,000 per financial yearRs 1.5 lakh per financial yearGirl Child – up to 10 years from birth and one additional year of graceInvestment (up to Rs 1.5 lakh exempt under Section 80C), interest and amount received on maturity is tax free

Advantages of the Post Office Investment- Saving Schemes in India 

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.

Documentation and procedures

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.

Investments in the Post Office Schemes

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.

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.

Interest Rates

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.

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.

How to open a Post Office Saving Schemes Account?

Post Office Saving Schemes are suitable for individuals with a low-risk appetite. The returns from these schemes are not prone to market fluctuations making it the suitable products for risk-averse investors who still wish to make the most of their savings.

You can open a recurring deposit or term deposit account online through the mobile app.

Step 1: Download and log into the India Post Mobile Banking app on your mobile from Google Play Store.

Step 2: Upon successful login, select the ‘Requests’ tab on the home screen to open a POFD account.

POFD_Request Tab

Step 3: Enter the details, such as the deposit amount, tenure, the account from which you want to deposit the money, nominee, and others to open the account.

For opening an account under any other Post Office Saving Schemes, you need to visit the home branch of the Post Office.

Step 1: Download and print the relevant application form from the Post Office’s official website.

Step 2: Attach all the necessary documents.

Step 3: Visit your home branch of the Post Office and submit the documentation to the relevant personnel.

Documents Required

  • Account Opening Form
  • KYC Form (For new customer/modification in KYC details))
  • PAN Card
  • Aadhaar card, if Aadhaar is not made available the following document may be submitted.
    • Passport
    • Driving license
    • Voter’s ID card
    • Job card issued by MNREGA signed by the State Government officer
    • Letter issued by the National Population Register containing details of name and address.
  • Proof of date of birth/birth certificate in case of a minor account.

Related Articles

Post Office Monthly Income Scheme (POMIS)

National Savings Certificate (NSC)

Senior Citizen Savings Scheme (SCSS)

Public Provident Fund (PPF) Account

Kisan Vikas Patra (KVP)

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