Post office is one of the oldest organizations in India which started way back during the British era in Oct 1854, initially focusing only on delivering mail (post) and later started providing an array of other financial services i.e., Banking, Insurance & Investments.
The biggest advantage of these schemes is their sovereign guarantee i.e., it is backed by the government. Some of the post office savings schemes also offer tax-savings benefits U/S 80C of the Income Tax Act.
Below is a list of such schemes with their applicable Interest rates: –
| Scheme | Interest Rate (Updated) | Minimum Investment (Rs) | Maximum Investment | Eligibility | Tax Implications |
| Post Office Savings Account | 4% | 500 | No limit | Individuals including Minors | Exempted Interest up to ₹10,000 |
| National Savings Recurring Deposit Account | 6.7% | 100 per month in multiples of 10 | No limit | Individuals including Minors | – |
| National Savings Time Deposit Account | 6.9% – 7.5% | 1,000 and multiples of 100 | No limit | Individuals including minors | Section 80C deduction on deposits for 5 Years |
| National Savings Monthly Income Account | 7.4% p.a. payable monthly | 1,000 | Max Rs 4.5 lakh for single A/C and Rs 9 lakh for Joint A/C | Individual including minors | The interest you earn is taxable and there are no deductions on the deposits, as per Sec 80 C |
| Senior Citizen Savings Scheme Account | 8.2% p.a. (Compounded Annually) | 1,000 | Max Rs 30 lakh | Persons more than 60 years of age and above 50 years of age who have taken VRS or superannuation. | There are tax benefits on scheme deposits as per Sec 80 C TDS is deducted if the interest earned is more than Rs 50,000 Interest taxable if more than Rs 50,000 |
| Public Provident Fund Account (PPF) | 7.1% p.a. (Compounded Annually) | 500 | Max 1.5 lakh per financial year | Individual and minors | Tax relief available under section 80C for deposits Interest earned is tax-free |
| National Savings Certificates (NSC) | 7.7% p.a. (Compounded Annually) but payable at maturity | 1,000 | No Limit | Individual and minors | Deposits qualify for tax exemption under 80C |
| Kisan Vikas Patra Account | 7.5% p.a. (Compounded Annually) | 1,000 | No limit | Individual and minors | The interest is taxed, but the amount received upon maturity is tax-free |
| Sukanya Samriddhi Account | 8.2% p.a. (Compounded Annually) | 250 | Max 1.5 lakh per financial year | Girl child below the age of 10 is eligible. To be opened in the name of the girl child by the guardian | – |
Post Office Schemes in Brief
Post Office Savings Account – It acts as a normal savings account of any bank, and the account is transferable from one post office to another.
National Savings Recurring Deposit Account – The Scheme helps small/poor investors to form a corpus to meet their future needs. An account is either opened by an adult or by two adults jointly.
National Savings Time Deposit Account – There is a tax benefit for the investment made in the 5-year post office time deposit. The investment qualifies for the deduction under Section 80C of The Income Tax Act, 1961.
National Savings Monthly Income Account – This is a scheme in which investors contribute a certain amount and earn a fixed interest every month.
Senior Citizen Savings Scheme Account – The Scheme is a savings instrument offered to Indian residents aged over 60 years. The deposit matures after 5 years from the date of account opening but can be extended once by an additional 3 years by the investor.
Public Provident Fund Account – Public Provident Fund is a long-term investment scheme declared by the Government of India. It is a safe post office deposit scheme that offers tax exemptions and attractive interest rates as decided each financial year.
National Savings Certificate (NSC) – The Scheme is a fixed income investment scheme that one can open with a post office. As part of an initiative from the Government of India, it is a savings bond that encourages subscribers, primarily small or mid-income investors, to invest while saving on income tax.
Kisan Vikas Patra Account – Kisan Vikas Patra is a certificate scheme from the post office. It may actually double as a one-time investment in a period of approximately 9 years & 10 months.
Sukanya Samriddhi Account – SSY is a savings scheme launched by the Government of India for the financial betterment of the girl child. The scheme enables parents to build capital for the future education and marriage expenses of their female child and provides an attractive interest rate on the investment.
Interest Rate and Taxability on Different Savings Schemes
| List of Schemes | Interest Rate and Return | Taxability |
Public Provident Fund | 7.1% p.a. compounded annually | Maximum deposit of Rs. 1,50,000 in a financial year is exempted under section 80C |
Post Office Savings Account | 4.00% p.a. on individual/joint accounts | Interest earned is Tax Free up to Rs. 10,000 p.a. from financial year 2012-13 |
Post Office Recurring Deposit Account | 6.7% p.a. on individual/joint accounts | _ |
Post Office Time Deposit Account | 6.9% (1 year), 7% (2 year), 7.1% (3 year) and 7.5% ( 5 year) | The investment under 5 Years TD is qualified for the benefit of Section 80C of the Income Tax Act, 1961 from 1st April 2007 |
Post Office Monthly Income Savings Account (MIS) | 7.4% per annum payable monthly | The maximum investment limit is Rs. 9 lakh in single account and Rs. 15 lakh in joint account |
| Senior Citizen Savings Scheme | 8.2 % per annum* | The maximum limit not exceeding Rs. 30 lakh and the investment under this scheme is qualified for the benefit of Section 80C of the Income Tax Act, 1961 from 1st April 2007 |
| Kisan Vikas Patra | 7.5% compounded annually | – |
| National Savings Certificate | 7.7 % compounded annually but payable at maturity | The deposits are qualified for for tax rebate under section 80C of Income Tax Act and the interest accruing annually but deemed to be reinvested under Section 80C of IT Act |
| Sukanya Samriddhi Accounts | 8.2% p.a. calculated on the annual basis | Maximum deposit of Rs. 1,50,000 in a financial year |
Documents for Post Office Saving Schemes
- Form (relevant)
- KYC Form
- PAN Card
- Aadhaar Card
- Driving license
- Voter’s ID card
- Job card
- Proof of date of birth
Process to Apply for a Savings Scheme in Post Office
Step 1: Visit the closest post office branch.
Step 2: Get the form to open the relevant account from the post office. However, you can also download the form online from the official portal of the Indian Post Office.
Step 3: Fill in the form with the needed details and submit it along with the KYC proof. You will also have to give other documents as required.
Step 4: Finish the process of enrolment by depositing the amount of the scheme you chose.
FAQs
Which post office scheme is suitable for 5 years?
The 5-Year Post Office Recurring Deposit Account (RD).
Is there a Post Office Scheme available to students?
Yes, students over the age of 18 can invest in the post office’s savings programmes. SSY, or Sukanaya Samriddhi Yojana, is a post office investment scheme in which parents or legal guardians can invest for their girl child aged 10 years or less.