Learn everything there is to know about India's Post Office Savings Schemes.

Post Office Investment-Savings Schemes
The Post Office Saving Schemes include several reliable products and offer risk-free returns on investment. 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 the post offices in each city.

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.

2. 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 5.8% 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 installments without defaulting.

3. 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. For a tenure of up to 3 years, the rate is 5.5% p.a., and for a 5-year term, the rate is 6.7% p.a.
• 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.
• Deposits cannot be withdrawn before the expiry of six months from the date of deposit.

4. Post Office Monthly Income Scheme Account (MIS)

• You can deposit a sum of Rs 1,000 up to Rs 4.5 lakh in a single account and up to Rs 9 lakh in a joint account.
• You can earn an interest rate of 6.6% p.a. through this account and get a monthly fixed income from the scheme.
• 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 Rs 4.5 lakh in Post office MIS account for a term of 5 years, you will receive monthly interest of Rs 2,475 every month up to the end of the tenure. You will get the deposit amount of Rs 4.5 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 the scheme.

5. Senior Citizen Savings Scheme (SCSS)

• This is a government-backed retirement scheme that allows you to make a lump sum deposit, i.e., one instalment.
• The deposit can range from Rs 1,000 up to Rs 15 lakh.
• The account can be opened individually or jointly with spouse only.
• The scheme offers an interest rate of 7.4% p.a. 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 defence 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.

6. 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 6.8% 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 1,00,000 invested will grow to Rs 1,38,949.29 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 the National Savings Certificate (VIIIth Issue) is accessible.

Advantages of the Post Office Investment-Saving Schemes in India

Easy to Invest

The saving schemes are easy to enrol 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 Investments 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. 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. There is a minimal amount of risk involved, as the Government of India undertakes these investment options.

Conclusion

There is a wide range of products based on different types of individuals. Well-known schemes are Public Provident Fund (PPF), Kisan Vikas Patra and Sukanya Samriddhi Yojanas. 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. If the features and benefits iterated above meet your financial goals, then invest in a post office savings scheme to secure your financial future at minimal risk.

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