India Post, which has a network of more than 1.5 lakh post offices across the country, offers nine types of 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 website - indiapost.gov.in. Interest rates on these post office saving schemes move in line with the government's interest rates on small savings schemes, which are revised on a quarterly basis.
Here are some of the key details about the small savings schemes offered at the post offices:
Minimum amount required to open accounts
Customers are required to invest a certain sum of money as the minimum deposit in these post office saving accounts to ensure operability. A post office account under any of the small savings schemes except recurring deposit can (RD) be opened with a minimum investment of Rs 20-1,500. For opening a five-year recurring deposit account, a minimum investment of Rs 10 per month is required, according to the India Post website.
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 offered on post office saving schemes
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.
India Post currently pays interest at the rate of 4 per cent per annum on deposit in its savings account, according to India Post's website. Post office RD account offers an interest rate of 7.3 per cent while the MIS account offers an annual return of 7.7 per cent, according to India Post.
In case of post office fixed deposit or time deposit account, interest rates are available across four maturities: one, two, three and five years. Investment in time deposits (TDs) of one-year, two-year and three-year maturity periods fetch an interest of 7 per cent. Five-year Time Deposit offers a return of 7.8 per cent.
The PPF account and senior citizen savings scheme offer a return of 8 per cent and 8.7 per cent per annum respectively. NSCs and Kisan Vikas Patra grant 8 per cent and 7.7 per cent per annum of interest rate respectively. The current interest rate on Sukanya Samriddhi account is fixed at 8.5 per cent per annum.
Saving schemes that offer tax benefits
Some of these post office saving schemes also qualify for income tax benefits. Using post office saving schemes such as Time Deposit (TD), Senior Citizen Savings Scheme (SCSS), Public Provident Fund (PPF), National Savings Certificates, 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, 1961.