India Post, which runs postal services in the country, also offers banking facilities. Besides allowing customers to open a savings account like banking peers, saving schemes in post offices offer attractive interest rates on investments. With the government revising small savings schemes interest rates between the October to December quarter, interest rates on all but one of the nine post office saving schemes have been raised by 0.4 per cent. Four of the nine saving schemes offered by India Post fetch interest rates of at least 8 per cent or more. All four of them are tax-saving schemes.
Given below are details of four post office saving schemes 2018 with 8% or more interest:
Senior Citizen Savings Scheme
This post office saving scheme, meant for senior citizens or people who take voluntary retirement at 55 years of age, matures in five years, said India Post, on its website indiapost.gov.in. For the quarter ending December 2018, the senior citizen saving scheme will offer an interest rate of 8.7 per cent per annum. The interest on senior citizen saving scheme is payable from the date of deposit of March 31/September 30/December 31 in the first instance and thereafter, interest shall be payable on March 31, June 30, September 30 and December 31.
Only one deposit is allowed in the senior citizen saving account in multiples of Rs 1,000, with the maximum amount not exceeding Rs 15 lakh.
If interest income exceeds Rs 10,000 per annum, tax is deducted at source on interest.
15-Year Public Provident Fund (PPF)
PPF account, which matures in 15 years, comes under the EEE (exempt, exempt, exempt) status. This means that the investment amount, the interest income and the maturity proceeds are all exempt of income tax. For the quarter ending December, PPF deposits will fetch an interest rate of 8 per cent per annum, which is compounded yearly.
PPF deposits can be made in one lump sum or in 12 installments. The minimum amount of investment in a PPF account is Rs 500. However, only Rs 1,50,000 can be deposited in a financial year.
Contributions made to PPF account qualify for deduction under Section 80 C of the Income Tax (I-T) Act, 1961.
National Savings Certificates (NSC)
NSC certificates will fetch a return of 8 per cent per annum for the October-December quarter. NSC certificates are compounded annually but are payable at the time of maturity of five years. For example, if you purchase a certificate of Rs 100, the investment grows into Rs 146.93 after five years, India Post said.
NSC certificates do not have a maximum limit. The investment should be a minimum of Rs 100 and in amounts of Rs 100. The interest accrues annually but is deemed to be reinvested under Section 80C of I-T Act.
Sukanya Samriddhi Accounts
The interest rate on Sukanya Samriddhi Accounts, which are meant for the girl child, is currently the highest of all nine post office saving schemes. Sukanya Samriddhi Accounts will offer a return of 8.5 per cent per annum in the December quarter. The interest is calculated and compounded on a yearly basis.
Sukanya Samriddhi Accounts allow a minimum deposit of Rs 1,000 in a financial year. The maximum investment in the scheme is restricted to Rs 1,50,000 in a financial year. The subsequent deposits are supposed to be made in multiples of Rs 100. Sukanya Samriddhi deposits can be made in a lump sum. However, there is no limit on the number of deposits either in a month or in a financial year.
The deposits made to the account, and also the proceeds and maturity amount are fully exempt from tax under section 80C of the I-T Act.
Government revises interest rates on small saving schemes every quarter.