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 National Savings Time Deposit Scheme provides four accounts with varying maturity dates. This system offers accounts with maturities of one year, two years, three years, and five years.
These accounts can be maintained either individually or by a group of up to three persons. Minor accounts are permitted; however, the legal guardian must manage them until the minor reaches the age of maturity. Under this approach, an individual may have many accounts.
Comparison of Interest Rates of Various Post Office Savings Schemes
Scheme Interest Rate (Applicable from 01/04/2024) Minimum Investment Maximum Investment Eligibility Tax Implications Post Office Savings Account 4% per annum (p.a.) Rs. 500 No limit Resident Indian, minor(above 10 years) and major Tax-free interest up to Rs 50,000 for senior citizens Post Office Time Deposit Account (TD) One-year – 6.9% p.a.
Two-year – 7.0% p.a.
Three-year – 7.1% p.a.
Five-year – 7.5% p.a.
(Compounded Quarterly)Rs 1,000 No limit Resident Indian, minor(above 10 years) and major -Tax benefits available under Section 80C only if the deposit is held for 5 years.
-Interest earned is taxable
-TDS to be deducted on interest earned for more than Rs 40,000 p.a.(Rs 50,000 in case of senior citizens)Post Office Monthly Income Scheme Account (MIS) 7.4% per annum payable monthly Rs 1,000 For single account- Rs 9 lakh
Joint account accounts- Rs 15 lakhResident Indian, minor(above 10 years) and major – Tax benefit under Section 80C for deposits
–Interest earned is taxable
-TDS to be deducted on interest earned for more than Rs 50,000 p.a.Senior Citizen Savings Scheme (SCSS) 8.2% p.a. (Compounded Quarterly) Rs 1,000 Maximum deposit over the lifetime allowed at Rs 30 lakh Individuals of age> 60 years or age between 55 and 60 for retired civilian or defense employees – 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 year Rs 1.5 lakh per financial year Resident Indian, minor and major Tax rebate under Section 80C for deposits (maximum Rs 1.5 lakh p.a.)
interest is tax-free.National Savings Certificates (NSC) 7.7% p.a. (Compounded annually) Rs 1,000 No limit Resident Indian, minor and major Tax rebate under section 80C for deposits (maximum Rs 1.5 lakh p.a.) Kisan Vikas Patra (KVP) 7.5% p.a. (Compounded annually) Rs 1,000 No limit Resident Indian, minor and major Interest is taxable, but no tax on the amount received on maturity Sukanya Samriddhi Accounts 8.2% p.a. (Compounded annually) Rs 250 per financial year Rs 1.5 lakh per financial year Girl Child – up to 10 years from birth Investment (up to Rs 1.5 lakh exempt under Section 80C), interest and amount received on maturity is tax-free
Eligibility Criteria
- The Post-Office Time Deposit (POTD) Account Scheme can be opened by any person who satisfies the below criteria.
- Any Indian who is over 18 years of age.
- Two persons jointly (Minors of age over 10 years and above can open the account jointly with their guardian)
- Parent or guardian can open this Time Deposit account on behalf of a minor.
Procedure to open Post Office Time Deposit
Step 1: First the applicant must decide the Post Office where they want to open the account.
Step 2: Then get the required application form from the relevant post office that has chosen and have to fill out the post office time deposit application form in a prescribed format.
Step 3: Fill the Post Office Time Deposit Account Opening application form with appropriate details without making any mistakes. Then provide the given following details in the application form.
- Applicant’s Name
- Residential Address
- Applicant’s Date of Birth
- Detail of Know Your Customer (KYC)
- Nomination Details
- Details of First deposit
- Aadhaar card number
Step 4: Submit the time deposit account application form application form in the prescribed format to the relevant official along with all the supporting documents/ certificates.
Step 5:After completing, attach the PAN Card, Address Proof, and all the ID proof records along with the application form. And carry the originals documents for the in-person KYC verification purpose.
Step 6: After completing the application form, submit the same and start operating the account.
FAQs
Features of the Post-Office Term Deposit Scheme
- The Term Deposit account can be opened by cash as well as the cheque. In case of cheque, the date on which the amount deposited would be the date of the presentation of the cheque.
- The account’s maturity period shall be of 5 years and can also be extended for the next years on year to year basis.
- This five-year Post-Office Term Deposit Scheme also offers with return on investment and tax deduction.
- After completing majority, the minor who opened the account has to apply for the change of the account on his name.
- A single account can be changed into a joint account and vice versa.
- Nomination facility is also available that the account holder can nominate during the account opening or even after the opening of the time deposit account at the ease.
- The depositor can get the tax benefit on the investment made for 5 years scheme under section 80C.
- Fixed Deposit account will be automatically renewed after attaining maturity period.
- One can get capital protection under the post office time the Indian Government backs deposit scheme.
- It offers guaranteed return charged at the time of opening account.
- It offers liquidity as the cash can be withdrawn at any time. The money can also be borrowed against this time deposit.
Post Office Time Deposit – Tax Benefits
The tax benefit is not applicable for small tenure. The tax benefit can be obtained only if the time deposit account scheme is opened for 5 years. The tax exemption benefit is provided under section 80C of the Income Tax Act. The maximum limit applicable is Rs. 1.5 Lakhs for the tax benefit.