Overview of the 9 Post Office Saving Schemes in India

Post Office Saving Schemes benefit people from every economic class in India. These small savings schemes are backed by the government. Some of the Post Office (PO) schemes come with tax benefits on the interest earned and principal investment amount. The schemes carry attractive interest rates and have flexible tenures for either short or long-term investment. You can expect regular and safe returns to build a corpus for various financial needs.

In this post, we will discuss the details of:

• National Savings Recurring Deposit (RD) Account
• Post Office Savings Account (SB)
• National Savings Certificates (VIIIth Issue) (NSC)
• Kisan Vikas Patra (KVP)
• Senior Citizens Savings Scheme Account (SCSS)
• National Savings Time Deposit (TD) Account
• Public Provident Fund Account (PPF)
• National Savings Monthly Income Account (MIS)
• Sukanya Samriddhi Account (SSA)

Best Post Office Saving Schemes to Choose for Investment

Do you want to keep your money safe and earn investment interest? Then opt for the following Post Office Saving Schemes:

1. National Savings Recurring Deposit (RD) Account

Here are the features of Post Office Recurring Deposit Account:

• This is a 5-year recurring deposit scheme by the Post Office. You can extend the account for another 5 years by dropping a request at the concerned PO
• You can open the account singly or jointly. Minors can also opt for this facility
• The minimum deposit per month is Rs. 100. There is no maximum limit for the amount you deposit
• You can deposit any multiples of INR 10 in cash or cheque
• The interest rate is 5.8% per annum and it is compounded quarterly
• You can earn a small rebate on advance deposit
• You can opt for premature closure after 3 years from the account opening date. But the rate of PO savings account will apply in this case
• Premature closure is not allowed until the time for which you make advance deposits
• There is a loan facility up to 50% of the account balance if you make 12 instalments without a break, and have continued the RD for 1 year, and continuing it
• The interest rate of the loan is 2% + RD rate
• You can repay the loan in monthly instalments or lump-sum. If you do not repay the loan, then the same is deducted from the maturity value of the account

2. Post Office Savings Account (SB)

Here are more details:

• You can open the account singly or jointly. Minors can also opt for this facility
• You have to deposit at least Rs. 500 initially. Subsequent deposits must be in Rs. 10 denominators at least
• The interest rate per year is 4.00%. Interest is credited at the end of every financial year
• There is no limit for a maximum deposit amount
• The minimum withdrawal amount is Rs. 50

3. National Savings Certificates (VIIIth Issue) (NSC)

Here are the features of the Post Office National Savings Certificate:

• You can open the account as an individual or jointly. Minors can also opt for this facility
• The minimum deposit amount is Rs. 1,000 in multiples of INR 100. There is no limit for the maximum deposit amount
• The interest rate per annum is 6.8%. The interest is compounded annually. The interest is however payable on maturity (after 5 years from the issue of the Certificate)
• The deposit under this scheme is applicable for tax benefits under the Section 80C of the Income Tax Act
• You can transfer the NSC as security or pledge. You can do so to Housing Finance Company, governor of a state, the President of India, local authority, government company, private or public corporation, RBI, cooperative bank/society, or scheduled bank
• Premature closure of NSC is not allowed until the death of one of the accountholders or all of them in case of a joint holding, on the order of the court, or the pledgee is a Gazetted Officer
• Similarly, the NSC account is transferrable from a person to another on the deal of the account holder to legal heirs or nominee, on the death of the account holder to the joint holder, on pledging the account to a particular authority, or by the order of the court

4. Kisan Vikas Patra (KVP)

Here is more on KVP:

• You can open the account as an individual or jointly (up to 3 members). Minors can also opt for this facility
• There is no maximum limit for the deposit amount. You have to deposit in multiples of Rs. 100. The minimum amount to deposit is Rs. 1,000
• The interest per annum is 6.9% and compounded annually
• You can transfer the KVP account as security or pledge. You can do so to Housing Finance Company, governor of a state, the President of India, local authority, government company, private or public corporation, RBI, cooperative bank/society, or scheduled bank
• KVP account is transferrable from a person to another on the deal of the account holder to legal heirs or nominee, on the death of the account holder to the joint holder, on pledging the account to a particular authority, or by the order of the court
• Premature closure is permissible at any time in case of the death of all the account holders in case of a joint account, or death of a single account holder, by the order of the court, forfeiture by Gazette Officer as a pledge, after 2 years and 6 months from the deposit date

5. Senior Citizens Savings Scheme Account (SCSS)​

Here are features of SCSS:

• You can open the account individually or jointly with your spouse
• But the deposit amount in a joint account is attributable to the primary account holder
• The interest rate per year is 7.4%. Interest is payable quarterly, and drawn into savings account at the same post office or ECS through auto credit
• If the interest exceeds Rs. 50,000 in a financial year, then the same is taxable at the income tax rate applicable. But this is not necessary on submitting Form 15G/15H
• Investment under this scheme provides tax benefits as under Section 80C of Income Tax Act, 1961.
• This scheme is for people over 60 years of age. Otherwise, retired civilian employees of 55 years of age and 60 years of age can also opt for if the investment is done in a month of receiving the retirement benefits. The same advantage is valid for retired Defence Employees who are over 50 years of age but less than 60 years old
• You can make only one deposit in this account up to Rs. 15 lakhs only. The deposit has to be in multiples of Rs. 1,000
• You can close the account after 5 years from the opening date. Also, you can extend the tenure from the maturity date by 3 years. You can apply for an account extension within a year of maturity
• If you close the account before a year, then the PO will not pay any interest on the investment amount. You can close an extended account after the expiry of 1 year from the extension date with no deductions
• If you opt for premature closure after a year but before 2 years from the account opening date, then a 1.5% amount is deducted from the principal sum. If you do the same after 2 years but before 5 years, then 1% amount is deducted from the principal sum

6. National Savings Time Deposit (TD) Account

Here is more on Post Office Time Deposit Account:

• You can open the account singly or jointly. Minors can also opt for this facility
• The minimum deposit amount is Rs. 1,000. There is no maximum cap on the deposit amount
• You have to deposit in the multiples of INR 100
• The interest rate is 6.7% for 5 years old account. For deposits from 1 to 3 years, the rate applicable is 5.5%. So, you can open the TD for 1, 2, 3, 4, or 5 years
• Interest is calculated quarterly but paid annually
• The investment under 5 year TD will offer you tax deduction benefits as per Section 80C of the Income Tax Act, 1961.
• You can extend the account for the duration of the original tenure after maturity
• 1-year TD is extendable within 6 months of maturity. 2-year, 3/5 year TD is extendable within 12 months and 18 months of maturity, respectively
• You can opt for premature closure only after 6 months but before 1 year. In this case, the interest rate of the PO savings account will apply
• If you prematurely close a 2/3/5 year TD account after a year, then 2% less than the original rate will apply, and the remaining period, the interest rate of the PO SB account will apply
• You can transfer the TD account as security or pledge. You can do so to Housing Finance Company, governor of a state, the President of India, local authority, government company, private or public corporation, RBI, cooperative bank/society, or scheduled bank

7. Public Provident Fund Account (PPF)​

Here is more on PPF:

• An individual resident Indian or a guardian on the behalf of a person of unsound mind/minor can open the account. Only a single account is allowed to be opened in any bank or Post Office in India
• In a financial year, you can invest a maximum of Rs. 1,50,000 and minimum Rs. 500
• You can deposit in instalments or lump-sum. Deposits qualify for tax deduction under the Section 80C of the Income Tax Act
• The PPF interest rate is 7.1% per annum. The interest is compounded annually
• The maturity period is after 15 financial years leaving out the FY of the account opening
• You can extend the account for 5 more years and so on within one year of maturity
• For an extended account, you can go for one withdrawal in every FY, up o 60% of the PPF account balance at the maturity time in the lock-in of 5 years
• You can withdraw once in a financial year after 5 years, leaving out the account opening year. The amount you withdraw has to be up to only 50% of the balance at the end of the fourth preceding year or the end of the previous year, whichever is lower
• Premature closure is permissible after 5 years from the end of the year when you opened the account. But this is allowed for high education of dependent children or you, if you/dependent children/spouse has a life-threatening disease, if there is a change of resident status i.e. NRI
• 1% interest is deductible from the amount on premature closure
• You can take a loan against PPF after a year from the end of the FY in which you opened the account. Or, it can also apply before the expiry of 5 years.
• You are eligible to take only one loan in a financial year. You cannot take a second loan until you completely repay the first one
• You can also take a loan up to 25% of the balance from the second year preceding the year wherein you applied for credit
• An interest rate of 1% per annum applies on the loan if you repay within 36 months. Otherwise, the PPF loan rate is 6% per year from the disbursement date

8. National Savings Monthly Income Account (MIS)

Here are the details of the Post Office Monthly Income Scheme Account:

• The interest is payable monthly. The applicable rate of interest per annum is 6.6%. The interest amount is taxable in the hand of the depositor
• You can open the account singly or jointly (up to 3 people). Minors can also opt for this facility
• If you open a joint account, then the maximum investment limit is Rs. 9 lakh
• The same is Rs. 4.50 lakhs if you open a single account
• The deposit has to be in multiples of Rs. 1,000
• As an individual, you can invest a maximum of Rs. 4.50 lakhs including your share in a joint account
• Each joint holder has an equal share in every joint account
• The maturity period is after 5 years from opening the account. If an account holder passes away before this duration, the account will close. The account balance is provided to the nominee/legal heirs. The interest accumulated is up to the preceding month to when the PO initiates the refund
• You cannot close the account before a year from the time of deposit. If the closure happens after 1 year but before 3 years, then 2% amount is deductible from the principal
• If the closure happens after 3 years but before 5 years, then 1% is deductible the principal amount

9. ​ Sukanya Samriddhi Account (SSA)​

Here is more on Post Office Sukanya Samriddhi Account:

• The SSA is a government scheme that you as a guardian can open in the name of your girl child, whose age is less than 10 years
• You can open only one account either in a bank or PO. The guardian operates the account till the child attains 18 years of age
• You can open this account for up to 2 girls in the family. But two accounts can be opened in case of the birth of twin/triplet girls
• The interest rate per annum is 7.6% annum. The interest is compounded yearly. The interest amount is tax-free under the Income Tax Act
• In a financial year, you can invest up to Rs. 1, 50,000. The minimum amount to put in is Rs. 250. The deposit is either in instalments or lump-sum. Deposits thereafter have to be done in INR 50 value.
• There is no restriction on the number of deposits you can make in a financial year. You can deposit up to 15 years from the account opening date
• You can withdraw the funds when the girl passes the 10^th standard or when she reaches 18 years of age. Withdrawal is possible up to 50% of the account balance as at the end of the previous financial year
• Also, you can withdraw in instalments or lump-sum not over one instance per year, for up to maximum of 5 years, subject to fee and charges or other specified ceiling
• Premature closure after 5 years from opening the account is permissible in the death of the account holder. The interest of the savings account will apply from the date of death to the payment date. It is also allowed on extreme compassionate grounds such as the death of the guardian who operated the account, or the girl child suffering from a life-threatening disease, etc
• Otherwise, you can close the account on maturity after 21 years from the account opening date. Or when the girl child marries after reaching 18 years of age. The amount in case of marriage as a reason is available either a month before or 3 months after the wedding takes place

To Conclude

Post Office Saving Schemes are oriented for rural and remote regions, which are under-banked. Some of the schemes are solely the investment instruments by the PO. And others are provided by the government, which you can even access at banks. The benefits of the ones mentioned above are subject to changes from time to time by the Ministry of Finance. So, keep a lookout for the latest information.