Post Office Saving Schemes: Interest Rates, Tax Benefits, Other Details
Department of Posts or India Post, which runs postal services in the country, also offers nine types of small saving schemes. These include the savings account, the five-year recurring deposit (RD), the time deposit or fixed deposit (FD), the Monthly Income Scheme (MIS) account, the Senior Citizens Savings Scheme (SCSS), the 15-year Public Provident Fund (PPF) and the National Savings Certificates (NSC), according to India Post's official website - indiapost.gov.in. Interest rates on these post office saving schemes move in line with government's interest rates on small savings schemes.
Here are key things to know about post office saving schemes:
Minimum amount required to open accounts
Given below are the minimum investments required in different types of post office saving accounts:
| Account name | Minimum amount required to open account |
|---|---|
| Savings account (Cheque account) | Rs 20 |
| Savings account (non Cheque account) | Rs 20 |
| Monthly Income Scheme (MIS) | Rs 1,500 |
| Fixed Deposit (FD) Account | Rs 200 |
| Public Provident Fund (PPF) | Rs 500 |
| Senior Citizen Savings Scheme (SCSS) | Rs 1,000 |
(Source: India Post website)
Interest rates
For the current quarter, ending on June 30, 2019, investment in post office small savings schemes fetch returns to the tune of 4-8.7 per cent, according to a Ministry of Finance statement dated March 29, 2019. Here are the interest rates of all types of post office saving schemes:
| Post office small saving scheme | Rate of interest for quarter ending March 31, 2019 | Compounding frequency |
|---|---|---|
| Savings Deposit | 4.00% | Annually |
| 1-Year Time Deposit | 7.00% | Quarterly |
| 2-Year Time Deposit | 7.00% | Quarterly |
| 3-Year Time Deposit | 7.00% | Quarterly |
| 5-Year Time Deposit | 7.80% | Quarterly |
| 5-Year Recurring Deposit | 7.30% | Quarterly |
| 5-Year Senior Citizen Savings Scheme | 8.70% | Quarterly and paid |
| 5-Year Monthly Income Scheme | 7.70% | Monthly and paid |
| 5-Year National Savings Certificate | 8.00% | Annually |
| Public Provident Fund Scheme | 8.00% | Annually |
| Kisan Vikas Patra | 7.7% (will mature in 112 months) | Annually |
| Sukanya Samriddhi Account Scheme | 8.50% | Annually |
(As mentioned on India Post's official website)
Premature closure
Premature closure facility (or encashment of certificates in case of NSCs) is also available in some of the small saving schemes. Here are premature closure period provided by different post office saving schemes:
| NSCs (VIII Issue) | Maturity period 5 years (for certificates issued on or after 01.11.2011) No premature encashment possible |
|---|---|
| Different Savings Accounts | |
| Savings account | Can be closed at any time |
| Recurring Deposit | Premature closure permissible after 3 years - only SB rate is permissible |
| Time Deposit | Premature closure permissible after 6 months |
| Monthly Income Scheme | Premature closure permissible after 1 year |
| Senior Citizens Savings Scheme | Premature closure after 1 year |
Income tax benefits
Some of the post office saving schemes also qualifies for income tax benefits. Using these products, an investor can claim a deduction up to Rs 1.5 lakh in a financial year from taxable income under Section 80C of the Income Tax Act. Income tax benefits are available on Time Deposit (TD), Senior Citizen Savings Scheme (SCSS), Public Provident Fund (PPF) and National Savings Certificates (NSCs).
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