Post Office Saving Schemes 2024 - Interest Rate, Benefits, Features and Plan Comparison

Budget 2023 Update:

Increased Deposit Limits: The maximum deposit for the senior citizen saving scheme has been enhanced from Rs 15 lakhs to Rs 30 lakhs. The maximum deposit limit for the monthly savings scheme is enhanced from Rs.4.5 lakh to Rs.9 lakh for a single account and from Rs.9 lakh to Rs.15 lakh for a joint account.

Post Office Investment-Savings Schemes

The Post Office Saving Schemes include several reliable products and offer risk-free investment returns. Around 1.54 lakh post offices spread all over the country operate these schemes. For example, the government operates the PPF scheme via 8200 public sector banks and post offices in each city. These investments are government-backed and thus provide guaranteed returns. 

Investments in post office schemes help to create a corpus for emergency purposes and achieve goals. They also offer tax benefits up to Rs.1.5 lakh under Section 80C of the Income Tax Act. The various schemes offered by the post office are discussed below.

Comparison of Interest Rates of Various Post Office Savings Schemes

Savings Schemes Under Post Office Investments

Post Office Savings Account

• The minimum deposit to open a post office savings account is Rs 500.
• The domestic customer can open the account in single or joint ownership.
• An interest rate of 4% p.a. is applicable on the deposits in the post office account.
• You can avail of a cheque book, ATM card, e-banking and mobile banking services, and other services with the account on request. Interest is credited at the end of each financial year.
• Individuals can avail up to Rs 10,000 deduction from the total income under Section 80TTA of the Income Tax Act.
• Individuals can avail up to Rs 10,000 deduction against interest income from savings bank account under Section 80TTA of the Income Tax Act and senior citizens can avail up to Rs. 50,000 under Section 80TTB against interest income from savings bank account, time deposits, recurring deposits.
• If no deposit/withdrawal takes place in an account during the three continuous financial years, then the account shall be treated as silent/dormant.
• Revival of such an account can be done by submitting application along with fresh KYC documents and a passbook at the concerned Post Office.

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 6.7% p.a.
• The interest is compounded quarterly.
• You can get a loan of up to 50% against the deposit available in the account after completing 12 instalments without defaulting.
• Account can be extended for a further 5 years by giving an application at the concerned Post Office. The interest rate applicable during extension will be the interest rate at which the account was originally opened.
• RD Account can be closed prematurely after 3 years from the date of account opening, by submitting prescribed application form at concerned Post Office.
• PO Savings Account interest rate will be applicable if the account is closed prematurely even one day before maturity.

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. The interest rates for Q1 FY 2024-25 i.e. from 1 April, 2024 to 30 June, 2024 are as follows:

• The investment in the account with five year maturity will qualify for Section 80C deduction.
• The Post Office TD account can also be pledged as a security to scheduled or cooperative banks, RBI, the housing finance company, government companies, and others by submitting a prescribed application form at the concerned Post Office supported with an acceptance letter from the pledgee. 
• Deposits cannot be withdrawn before the expiry of six months from the date of deposit.
• TD accounts can be closed prematurely by submitting a prescribed application form with the pass book to the concerned post office.
•  If TD account closes after 6 months but before 1 year, PO Savings Account Interest rate will be applicable.

Post Office Monthly Income Scheme Account (MIS)

• You can deposit a sum of Rs 1,000 up to Rs 9 lakh in a single account and up to Rs 15 lakh in a joint account.
• You can earn an interest rate of 7.4% p.a. for Q1 FY 2024-25 through this account and get a monthly fixed income from the scheme.
• The maturity period of POMIS is 5 years.
• If the account holder dies before the maturity, the account may be closed and the  amount will be refunded to the nominee. Interest will be paid up to the preceding month, in which a refund is made.
• If the account is closed after 1 year and before 3 years from the date of account opening, a deduction of  2% will be deducted from the principal amount and the  remaining am,ount will be paid.
•  If the account is closed after 3 years and before 5 years from the date of account opening, a deduction of 1% will be deducted from the principal amount and the remaining amount will be paid.
•  The account can be prematurely closed by submitting the prescribed application form with the passbook at the concerned Post Office. ​
• You cannot prematurely close the account before completing one year. Premature closure beyond one year can attract penalties.
• For example, if you invest up to the maximum amount of Rs 9 lakh in Post office MIS account for a term of 5 years, you will receive monthly interest of Rs 5,325 every month up to the end of the tenure. You wil get the deposit amount of Rs 9 lakh at the end of the term of five years.
• The interest income in post office TD/RD is received at the end of the term but interest from post office MIS is received monthly during the tenure of scheme.

Senior Citizen Savings Scheme (SCSS)

• This is a government-backed retirement scheme that allows you to make a lump sum deposit, i.e. one installment.
• The deposit can range from Rs 1,000 up to Rs 30 lakh.
• The account can be opened individually or jointly with spouse only.
• The scheme offers an interest rate of 8.2% p.a. for Q1 FY 2024-25. The interest is payable quarterly.
• Individuals above the age of 60 are eligible to open this account.
• Retired civilian employees aged between 55 years and 60 years and retired defense employees aged between 50 years and 60 years can also open the account subject to investing the retirement benefits within one month from the date of receipt of the benefits.
• The investment under this scheme qualifies for deduction under Section 80C of the Income Tax Act.

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 under Section 80C.
• The minimum deposit required to open the account is Rs 500, and the upper limit is Rs 1.5 lakh.
• The account tenure is 15 years from the date of opening the account. You only have to pay Rs 500 per financial year to keep the account active.
• The scheme offers an interest rate of 7.1% p.a. compounded annually. Also, the interest earned on this account is tax-free.
• The amount invested in PPF can be claimed as deduction under Section 80C of the Income Tax Act.
• The investor can extend the account for further five years block by submitting prescribed extension form at concerned Post Office.
• Interest shall be credited to the account at the end of each Financial year.
• If in any financial year, minimum deposit of Rs.500/- is not made, the said PPF account shall become discontinued.

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.
• The interest rate of 7.7% p.a. is compounded annually and 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.
• For example, Rs 1,000 invested will grow to Rs 1,403 after five years.
• The amount deposited in this account qualifies for Section 80C deduction.
• NSC can be pledged as a security with scheduled or co-operative banks.
• Currently National Savings Certificate (VIII Issue) is accessible.

Kisan Vikas Patra (KVP)

• The attraction of this scheme is that you can double your investment over the tenure of the account.
• The minimum deposit for this account is Rs 1,000. As per the rates applicable to the first quarter of the fiscal year 2024-25, the applicable interest rate is 7.5% p.a.
• The account tenure is 115 months (9 years and 7 months). The amount invested gets doubled in this tenure. Rs 1 lakh invested in KVP will grow to Rs 2 lakh in 115 months.
• Please note that the tenure of the account varies with the variation in the interest rate.
• KVP can be pledged as a security with scheduled or co-operative banks.

Sukanya Samriddhi Accounts (SSA)

• This is a government scheme dedicated to the financial well-being of the girl child.
• SSA can be opened only for girl children below the age of 10 years.
• The account must be opened and operated by parents or guardians till the girl child attains 18 years of age.
• The minimum deposit required is Rs 250 and a maximum of Rs 1.5 lakh per financial year.
• An interest rate of 8.2% p.a. is applicable. The interest is calculated every year and compounded annually.
• The interest earned is exempt from tax.
• The guardian can operate the account until the girl child attains 18 years of age.
• You can deposit for a maximum of 15 years from the date of opening the account.
• The deposits made in SSA account will qualify for deduction under Section 80C of the Income Tax Act.
• SSA account can be closed on maturity after  21 years from the date of account opening or at the time of marriage of the girl child after attaining the age of 18 years.
• But no closure is allowed before 1 month or after 3 months from the date of marriage.

Advantages of the Post Office Investment-Saving Schemes in India

Easy to Invest

The savings schemes are easy to enroll in and best suited for 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 investments a much-preferred savings cum investment option. 

Documentation and Procedures

Limited documentation and proper procedures in the post office ensure that these saving schemes are simple to opt for and safe to be locked onto as the government backs them. 

Fulfilment of Investment Goals

The investments in the Post Office Schemes are long-term oriented, with the investment period extending up to 15 years for a PPF account. Therefore, these investment options are excellent for retirement and pension planning. 

Tax Exemption

Most of these schemes are eligible for tax rebates under Section 80C for the deposit amount. A few schemes like the PPF, 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% and are risk-free. A minimal amount of risk is 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 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 good returns and keeping their investments safe. These schemes are easy to manage.   

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 them ideal for risk-averse investors who still wish to make the most of their savings. You can open a post office savings scheme account online through Internet banking, mobile app or by downloading the account opening form.

Through Internet Banking

Step 1: Visit the Department of Posts (DOP) Internet Banking website.
Step 2: Click the 'New User Activation' button.
Step 3: Enter the 'Customer ID' and 'Account ID' and click the 'Continue' button. You can also visit your home post office branch, fill out the application form for activating Internet banking and submit with required documents. 
Step 4: Once Internet banking is activated, enter your user ID and password to log in to your DOP Internet banking.
Step 5: Click on the 'General Service' tab on the menu and click on the 'Service Request' tab.
Step 6: Under the 'Service Request' section, click the 'New Requests' tab.
Step 7: Select the type of account you want to open from the multiple options.
Step 8: Enter the details on the application form and click the 'Submit' button.

Through 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 post office saving account.

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

By downloading the application form

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.
Step 4: Pay the minimum amount required to open the account/scheme.
Step 5: The post office officials will verify your application, open your account and also give the passbook for the account.

Documents Required to Open Post Office Savings Scheme

• 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)