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Post Office Saving Schemes- Nine Investment Schemes You Should Know

Updated on November 14, 2019 , 11194 views

Post Office Small Savings Schemes are very popular in India as people prefer Investing money in instruments backed by the Government of India. These are the schemes that aim at providing secure investments with guaranteed returns. These post office schemes are launched to encourage the savings habit amongst investors. The Post Office Saving Schemes include a bucket is products that offer risk-free returns and good interest rates. The interest rates of Small Saving Schemes are decided every quarter by the government. Let’s check all the nine Post Office Saving Schemes offered by the Government of India.

Post Office Investment Schemes In India

1. Post Office Savings Account (POSA)

This Savings Account in a post office works like a bank account that you open in any public sector bank. Post Office Savings Account offers an interest rate of 4 percent on an individual or joint account. The interest rates on savings deposits keep changing after every June quarter. The interest rates on savings deposits keeps changing after every June quarter. Like a normal bank account, a Post Office Savings account doesn’t come with a cheque book facility. In this account, an interest amount up to INR 10,000 is exempted from tax under section 80TTA. A minimum balance of INR 500 is to be maintained in the account

2. 5-Year Post Office Recurring Deposit Account (RD)

This account offers an interest rate of 6.9 percent p.a. (quarterly compounded). There is no maximum deposit to this account. The Post Office RD account can be opened in the name of a minor, and a minor of 10 years & above age can open and operate the account. One withdrawal up to 50 percent of the balance is allowed after one year.

POSS

3. Post Office Time Deposit Account (TD)

Currently, the interest rates for term deposits (TD) stands at 6.6 per annum. In this account, the investment under 5 Years TD qualifies for the tax benefit under Section 80C of the Income Tax Act, 1961. There is no maximum deposit limit in this scheme.

Interest rate under Post Office Time Deposit Account is payable annually but calculated quarterly.

Period Interest Rate
1-year account 6.6%
2-year account 6.7%
3-year account 6.9%
5-year account 7.4%

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4. Post Office Monthly Income Scheme Account (MIS)

In Post Office MIS an individual invests a particular amount and gets an assured monthly income in the form of interest. Under this scheme, the interest that is payable on a monthly basis (starting from the date of deposit) is deposited in your post office savings account. The current interest rate on Post Office MIS Account is 7.3 percent p.a. payable monthly. There are no income tax benefits available for investing in this scheme. The maturity period of Post Office Monthly Income Scheme is of 5 years.

Post Office Monthly Income Scheme Account cab be prematurely closed after a year. However, 2 percent of deduction amount will be charged if the account is closed between 1 year to 3 years. And after three years, 1 percent will be deducted.

Scheme Interest Rate 2017-18 (p.a.) Minimum Deposit Investment Period
Post Office Savings Account 4% INR 20 NA
5-Year Post Office Recurring deposit Account 6.9% INR 10/ Month 1- 10 Years
Post Office Time Deposit Account 6.6% INR 200 1 Year
Post Office Monthly Income Scheme Account 7.3% INR 1500 5 Years
5- Year Senior Citizen Savings Scheme 8.3% INR 1000 5 Years
15-Year Public Provident Fund Account 7.6% INR 500 15 Years
National Savings Certificates 7.6% INR 100 5 or 10 Years
Kisan Vikas Patra 7.3% INR 1000 9 Years 5 Months
Sukanya Samriddhi Yojana Scheme 8.1% INR 1000 21 Years

5. Senior Citizen Savings Scheme (SCSS)

This is the special scheme dedicated to the senior citizens of India. This scheme is fetching an interest rate of 8.3 percent per annum from 2017. An individual who is of 60 years and more may open the Senior Citizen Savings Scheme Account. The maturity period of SCSS is 5 years and the maximum amount in the scheme should not exceed INR 15 lakh. The interest rate of this scheme is retained by the government after every June quarter. The interest rate on the senior citizens' scheme is paid quarterly. The investment amount in this scheme will be deducted under section 80C, and the interest earned is taxable & subject to TDS as well.

6. 15-year Public Provident Fund Account (PPF)

Public Provident Fund is one of the popular savings schemes for retirement savings. Here, the investors get the benefit of EEE - exempt, exempt, exempt - status in terms of income tax treatment. Contributions in Public Provident Fund up to INR 1.5 lakh in a financial year is eligible for tax deductions under Sec 80C of the Income Tax Act. Moreover, investors get a loan facility and also can make a partial withdrawal. Currently, the interest rates offered for PPF account are 7.6 percent per annum. The PPF accounts come with a maturity period of 15 years.

7. National Savings Certificates (NSC)

This scheme is launched by the Government of India to promote the habit of savings amongst the Indians. The minimum investment amount for this scheme is INR 100 and there is no maximum investment amount. The interest rate of NSC changes every year. For FY 17-18 the interest rate of NSC is 7.6% p.a. One can claim tax deduction of INR 1.5 lakh under Section 80C of the Income Tax Act. Only residents of India are eligible to invest in this scheme.

8. Kisan Vikas Patra (KVP)

Kisan Vikas Patra facilitates people to invest in a long term savings plan. KVP has been recently re-introduced in 2014 by the government of India. A Kisan Vikas Patra certificate is offered in multiple denominations that gives flexibility to the customers. The denominations vary from INR 100 to a maximum of INR 50,000. The current interest rates offered are 7.3 percent compounded annually. There is no maximum limit for investment in this scheme.

9. Sukanya Samriddhi Yojana Scheme (SSYC)

Sukanya Samriddhi Yojana Scheme was launched with an aim to encourage the parents to secure the future for their daughters. This scheme was launched in the year 2015 by The Prime Minister of India Narendra Modi launched under the ‘Beti Bachao, Beti Padhao’ campaign. This scheme is targeted towards the minor girl child. SSY account can be opened in the name of the girl from her birth to any time before she turns 10 years old. The minimum investment amount for this scheme is INR 1,000 to a maximum of INR 1.5 lakh per year. This scheme is operative for 21 years from the date of opening.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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