Various Types of Post Office Schemes and their benefits

Post Office Scheme

When was the last time you visited a post office to buy stamps or post letters? The present younger generation does not even know that a post office’s primary duty is to deliver mail and sell stamps. Today, the definition of the Post Office has changed with this organization offering banking services like Post Office Savings accounts and other deposit products. Let us discuss the various types of post office schemes and their benefits.

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Different Types of Post Office Savings Schemes

This tabular form should make things easy to understand.

Scheme

Post Office Savings Account

Interest Rate

4%

Minimum Investment

Rs 500

Maximum Investment

No Maximum Limit

Eligibility

All individuals, including minors

Tax Implications

Interest exempted up to Rs 10000

   

Scheme

National Savings Recurring Deposit Account

Interest Rate

5.8%

Minimum Investment

Rs 100 per month, and thereafter in multiples of Rs 10

Maximum Investment

No maximum limit

Eligibility

All individuals, including minors

Tax Implications

NIL

   

Scheme

National Savings Time Deposit Account

Interest Rate

5.5% to 6.7%

Minimum Investment

Rs 1000, and in easy multiples of Rs 100

Maximum Investment

No maximum limit

Eligibility

Individuals, including minors

Tax Implications

Section 80C deduction is available on deposits for up to five years.

   

Scheme

National Savings Monthly Income Account

Interest Rate

6.6% payable monthly

Minimum Investment

Rs 1000, and in simple multiples of Rs 100

Maximum Investment

No maximum limit

Eligibility

Individuals, including minors

Tax Implications

The interest is taxable, and no deductions are available under Sec 80C.

   

Scheme

Senior Citizen Savings Scheme Account

Interest Rate

7.4% compounded annually

Minimum Investment

Rs 1000

Maximum Investment

Rs 15 lakhs

Eligibility

a.    Persons more than 60 years of age

b.    Persons above 50 years who have taken VRS or superannuation

Tax Implications

Tax benefits as per Sec 80C are available. TDS is applicable on interest if it is more than Rs 50000. Interest over Rs 50000 is taxable.

   

Scheme

Public Provident Fund Account (PPF)

Interest Rate

7.1% compounded annually

Minimum Investment

Rs 500

Maximum Investment

Rs 1.5 lakhs per financial year

Eligibility

Individuals, including minors

Tax Implications

Interest is tax-free, and the deposits qualify for tax relief under Sec 80C.

   

Scheme

National Savings Certificate (NSC)

Interest Rate

6.8% compounded annually but payable on maturity

Minimum Investment

Rs 1000

Maximum Investment

No maximum limit

Eligibility

Individuals, including minors

Tax Implications

Deposits qualify for tax deduction under Sec 80C.

   

Scheme

Kisan Vikas Patra (KVP)

Interest Rate

6.9% compounded annually

Minimum Investment

Rs 1000

Maximum Investment

No maximum limit

Eligibility

Individuals, including minors

Tax Implications

The interest earned is taxed, but the amount paid on maturity is free from tax.

   

Scheme

Sukanya Samriddhi Account

Interest Rate

7.6% compounded annually

Minimum Investment

Rs 250

Maximum Investment

Maximum of Rs 1.50 lakhs per financial year

Eligibility

Opened in the girl child’s name by the guardian (Girl below ten years of age)

Tax Implications

NIL

   

The Procedure for Applying for a Post Office Savings Scheme Account.

  • You have to visit the nearest post office to open the account.
  • Fill out the account opening form. The form is also available online on the Indian Post official website.
  • Provide the required documentary evidence and complete KYC formalities.
  • Select the respective scheme and deposit the amount as agreed.

These documents are necessary for opening a Post Office Savings Account

The following KYC documents should accompany the completed account opening form.
  • PAN card copy
  • Aadhar Card copy
  • Driving License copy
  • Voter ID copy
  • Job card
  • Proof of date of birth

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The Advantages of investing in Post Office Savings Accounts

  • The Post Office Savings accounts are among India’s most accessible savings accounts. They require minimum documentation. They are safe investment avenues because they ensure a fixed return guaranteed by the Indian Government.
  • Post offices are available all over the country, even in the remotest of villages. Hence, these accounts have the maximum reach among the Indian population.
  • The Post Office Monthly Saving Scheme is the most popular as it ensures a steady stream of monthly income to the account holder.
  • The PPF accounts are excellent for tax savings and serve as retirement benefit funds.
  • The NSC Post Office accounts are still the most favored tax-saving instruments. Besides, the amounts invested in this scheme are utilized for national development.
  • The Post Office savings account interest rate is similar to what banks offer. Besides, the Post Office savings account also offers debit cards and chequebooks.
  • The interest rate on other accounts is comparatively higher than what public and private sector banks offer to their customers.
  • The Post Office savings accounts offer excellent taxation benefits under various sections of the IT Act.
  • The Sukanya Samriddhi account is unique as the only savings account exclusively for girls.
  • The Senior Citizen Savings Scheme offers the best interest rate on your savings among peer deposit schemes.
  • The Post Office accounts are transferable from one post office to another.
  • The NSC and KVP can be pledged with banks to take loans and overdrafts.
  • PPF accounts are opened at post offices and banks across India.

The Post Office Savings Account’s USP

Indians trust the Government more than the private sector. Hence, you find more people willing to open savings account deposits in post offices rather than with the private banks. They trust the Government’s guarantee about interest repayment. Besides, the funds invested in schemes like NSC, KVP, SSY, etc., are used for national development causes. Hence, people feel they are contributing to the nation’s development.

Final Thoughts

Post Office Savings Bank is a new entity, but it has garnered excellent patronage across India because of the inherent postal services it offers to people. Besides, the Post Office Savings Account Interest rate is among the best offered by contemporary financial institutions. Today, the Post office Savings Bank can stand shoulder-to-shoulder with various banks in the public and private sectors. The only drawback is that the Post Office Savings bank does not offer loans to its customers.

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