Post office saving scheme

Contents
  1. Various post office saving schemes
  2. Benefits of the post office saving scheme 
  3. Which documents are required for the post office saving scheme?
  4. How to apply for post office saving schemes?
  5. FAQs

Post office saving schemes have many products which give reliability and risk-free returns on investment. And, the post office schemes through 1.54 lakh post offices all around the country. PPF scheme is operated through 8200 branches of public sector banks along with post offices in each city.

Various post office saving schemes

  • Post office savings account: The post office saving scheme is the best saving scheme which is available all around the world. The post office saving scheme provides fixed interest rates on the principal amount. This scheme is best for those who seek to earn fixed returns from their investments. An individual can open up a saving account in the post office with only 20Rs. It is very popular in the rural areas of the country. The central government decides the rate of interest for the post office saving scheme. 

The government of India decides the rate of interest for the post office savings account. Even, the rates are almost the same as the bank savings account. The post office saving has an interest rate near about 4% and it is calculated every month. According to the Indian tax regulations, the interest amount is less than INR 50,000 per annum is tax-free in the hands of the depositor. They have to maintain a minimum balance of INR 50 and INR 500 if they have a cheque facility. Also, the post office saving scheme can be easily transferred from one post office to another.

  • 5-year recurring account: It allows investors to do saving every month.  The interest is compounded every quarter. The post office saving scheme has a total of 60 monthly installments. The post office is suitable for those who want to save every month. The interest rate of this scheme is 5.8% per annum. Investors can start with a minimum amount of investment is INR 10. All Indian residents who are above the age of 18 years can open their accounts in the post office. Individuals who are 10 years old can also open and operate their accounts with their guardians. Parents can also open their accounts on behalf of their minor child. 

Individuals are unable to withdraw their post office RD investment before the maturity date. But you can break the RD in emergencies. There is a penalty of INR 1 for every INR 100 investment. It has a minimum lock-in period of investment of 3 months. No interest is given if there is made premature withdraw before three months. The depositors will only receive their principal amount.

  • Post office time deposit account: It is the most popular saving scheme in which interest rates are determined by the Finance Minister every four months. The rates depend upon the yield of government securities and spread all around the government sector yield. The minimum requirement of INR 1,000 for investment in a post office fixed deposit account. An individual can open the TD account for any tenures: - one year, two years, three years, and five years. The depositors can choose for re-investment of the interest. But this facility is not available for one year. 

Time deposits can also be changed from one post office to another. If on the maturity date, the depositor doesn't withdraw then the amount will be reinvested for the initial tenure of the deposit at the new applicable interest rates. Investment in the post office time deposit qualifies for a tax deduction in Section80C of the income tax act. The depositor can claim tax benefits up to INR 1.5 lakhs every year. 

  • Senior citizen savings scheme: This scheme is best for a senior citizen that provides regular income and safety of depositors.  The regular income is given in the form of an interest rate which is calculated every quarterly. It is credited to the account of the investor after every four months. The minimum amount of investment is INR 1000 and the maximum of INR 1,500,000. The interest rate is 7.40% every quarter. This scheme has a five-year lock-in period. This scheme allows investors to withdraw before maturity. But it subjects to some penalties, and penalties differ based on tenure. 

  • National saving certificate: It is a small saving scheme that encourages low-income persons and mid-income groups. This initiative has been taken by the government of India and the returns are guaranteed. The interest rate is 6.8%. It has a lock-in period of five years. The depositor will get the investment and interest amount on maturity. Investors can invest in a minimum amount of INR 100. Only Indian residents are eligible to invest in NSC. Depositor can't withdraw their NSC investment before maturity except in case of the death of the investor. An individual can always take a loan against their NSC investment. 

  • Kisan Vikas Patra: This scheme is mainly started for farmers. So, the scheme is extended to all residents of India. This scheme surely provides income in the form of interest. It pays a fixed interest of 6.9% per annum. The interest rates are revised every four months. The depositor can invest with a minimum amount of INR 1000. There is no limit on the maximum amount that one can invest. Investment above Rs.50,000 needs a PAN card and investment above RS.10 lakhs needs to submit income proof. It has a lock-in period of five months. So, investors cannot withdraw their investments in six months. Remember that investment in KVP doesn't eligible for a tax deduction. 

  • Sukanya samriddhi accounts: This initiative is taken by the government of India that supports "Beti Bachao, Beti padaho". It was introduced in 2015 which promotes girl's education and marriage. The interest rate of this scheme is 7.6% for the current quarter. It is the fixed income that surely gives a return. Parents or guardians of the girl child can invest in this scheme before 10. The eligibility of this scheme is the residents of India. The scheme matures when the girl gets 21 years old or till their marriage. Investments can be done at age of 15. There is no premature withdrawal allowed until the scheme matures. There are few exceptions to withdrawal is if unfortunately dies or any life-threatening disease. At 18 years, half of the amount can be withdrawn for the motive of higher education. And, the interest and maturity amount is also free from tax advantage.

  • Public provident fund account: It is the post office saving account which is introduced by the National saving institute in 1968. The Finance Minister revised the interest rate every quarter. Interest is to be paid on 31st March every year. So, the interest is to be calculated every month on the minimum balance from the 5th to 30th of every month. It has a fixed period of 15 years. The depositors can withdraw partial or at the end of 5 years. An investor can withdraw 50% of the balance of the preceding year. Investors can prematurely closure of their PPF account but they have to pay a penalty of 1%. An individual can also take a loan against their PPF investment between the 3rd and 5th year. But, the terms of the loan have changed from time to time. Investment in PPF is also eligible for a tax rebate.      

Benefits of the post office saving scheme 

  • Easy to invest: The post office saving schemes are easy to invest in and suitable for both rural and urban people. These schemes are the most preferred saving scheme due to simple procedures and ease of availability.

  • Documentation and procedure: Post office saving schemes requires limited documents and proper procedure to ensure that saving schemes are simple and safe to be locked.

  • Tax exemptions: most of the saving schemes are eligible for tax rebates under section 80C for the deposit amount.  

  • Interest rates: Interest rates of saving schemes range from 4% to 9% and that is free from risk. The government of India undertakes these schemes so there is a minimum amount of risk.

  • Investments in the post office scheme: investment in the post office saving scheme is long-term oriented with the investment period extending up to 15 years for the PPF account. And, investment options are the best option for retirement and pension scheme.

Which documents are required for the post office saving scheme?

  • Account opening form

  • Aadhar card

  • Birth certificate

  • PAN card

  • KYC form

How to apply for post office saving schemes?

For opening a recurring deposit account, you will apply through the mobile app.

Step1. Install the India Post mobile banking app on your mobile phone from the Google play store. 

Step2. After downloading, you need to log in.

Step3.Then, select the 'request' tab on the home screen to open an FD account.

Post office saving scheme

Enter all the asked information 

You will need to visit to post branch for opening an account under post office saving schemes.

Step1. Install and print the relevant application form from the official website of the post office.

Step2. Upload all the necessary documents.

Step3. Go to the nearest branch of the post office and submit all the documentation to the relevant personnel.

FAQs

Ques1. How to invest in a post office saving scheme?

Ans. You can invest in a post office saving scheme to go to the nearest branch of the post office or you can apply online through the app.

Ques2. Which necessary documents are required for the scheme?

Ans. Aadhar card, PAN card, account opening form, and KYC are required for the post office saving scheme.

Ques3. What is the interest rate of the post office saving scheme?

Ans. The interest rates are varied as it depends on which scheme you are going to invest in.

Ques4. What is the main benefit of the post office saving scheme?

Ans. The main benefit is the tax rebate or tax exemptions. You can claim the invested amount under Section 80C of the tax act.