Looking To Invest In Post Office Saving Schemes? Here Are 10 Things To Know
India Post or Department of Posts, which runs postal services in the country, also offers banking facilities. It offers nine types of small saving schemes - Post Office Savings Account, 5-Year Post Office Recurring Deposit Account (RD), Post Office Time Deposit Account (TD), Post Office Monthly Income Scheme Account (MIS), Senior Citizen Savings Scheme (SCSS), 15 year Public Provident Fund Account (PPF), National Savings Certificates (NSC), Kisan Vikas Patra (KVP), and Sukanya Samriddhi Accounts. Interest rates on these post office saving schemes move in line with the government's interest rates on small savings schemes.
Here are 10 things to know about post office saving schemes:
1. At present, the interest rates applicable to post office saving schemes are reviewed on a quarterly basis.
2. For the current quarter, ending on March 31, 2019, investment in post office small savings schemes fetches returns to the tune of 4-8.7 per cent, according to a Ministry of Finance statement dated December 31, 2018.
3. In the current quarter, the interest rates on time deposit accounts were revised, and those applicable to other savings schemes were kept changed.
4. 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)
5. Customers are required to invest a certain sum of money as the minimum deposit in these small saving accounts to ensure operability.
6. A post office account under any of the small savings schemes except recurring deposit can be opened with a minimum investment of Rs 20-1,500, according to India Post's official website - indiapost.gov.in.
7. For opening a five-year recurring deposit account, a minimum investment of Rs 10 per month is required, according to the India Post's website.
8. Given below are the minimum investment 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 |
(As mentioned on India Post's official website)
9. Some of these post office saving schemes also qualify 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.
10. In case of some of the deposits, a tax deducted at source (TDS) is levied by the post office on interest income which a customer earns. Under the current norms, investors are required to seek refund on tax deducted on interest income beyond Rs 10,000 per annum. The interim Budget 2019 proposed raising the TDS threshold on interest earned on office deposits to Rs 40,000, which will be applicable from April 1, 2019.
