Post office, also called as Department of Post, offers nine types of small saving schemes such as saving account, fixed deposit account, senior citizen savings scheme (SCSS) account, recurring deposit account, among others. In case of some of the deposits, a tax deducted at source (TDS) is levied by the post office and banks 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 bank and post office deposits from Rs. 10,000 to Rs. 40,000 for the next fiscal.
Given below are different types of small saving schemes offered by post office:
Post office savings account
India Post pays interest at the rate of 4 per cent per annum on deposit in its savings account, according to India Post’s website – indiapost.gov.in. The minimum amount required for opening of a savings account with Post office is Rs. 20. A post office savings account can be opened by cash only. A cheque facility is available if the account is opened with Rs. 500 and for this purpose, maintenance of a Rs. 500 as minimum balance is required, according to the India Post website. The minimum balance that is required to be maintained in an account without the cheque facility is Rs. 50.
Post office recurring deposit (RD) account
Post office Recurring Deposit (RD) account offers an interest rate of 7.3 per cent per annum, which is compounded quarterly. The minimum amount required for opening a post office recurring deposit account (RD) is Rs. 10 per month. While there is no upper limit applicable to the deposit in an RD account, the investor can pick any value in multiples of Rs. 5 above Rs. 10, according to the India Post portal. On maturity, a recurring deposit of Rs. 10 per month fetches a return of Rs. 725.05 on maturity and can be continued for another five years on a year-to-year basis.
Post Office Time Deposit (TD) or Fixed Deposit (FD) account
Post office time deposit (TD) or Fixed Deposit (FD) account can be opened by cash or cheque. The minimum amount that one requires to open a fixed deposit with the post office is Rs. 200. There is no maximum limit available. Interest is payable annually but is calculated quarterly. This account offers interest rates across four maturities: one, two, three and five years. Post office fixed deposit for one year, two years, three years, and five years offer 7 per cent, 7 per cent, 7 per cent, and 7.8 per cent respectively.
Post office monthly income scheme or MIS account
Post office MIS account offers an annual return of 7.3 per cent. The minimum amount required to open a monthly income account is Rs. 1,500. The maximum investment limit is Rs. 4.5 lakh in a single account and Rs. 9 lakh in a joint account, according to India Post’s official website. Nomination facility is available at the time of opening and also after opening of MIS account.
Post office senior citizen savings scheme (SCSS)
The senior citizen savings scheme offers an interest rate of 8.7 per cent per annum, which is payable from the date of deposit on 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. However, customer can make only one deposit in the account in multiple of Rs. 1,000 which should not exceed Rs. 15 lakh. The maturity period of Senior Citizen Savings Scheme is five years.
Post office public provident fund or PPF account
PPF account offers an interest rate of 8 per cent per annum, which is compounded annually. One can open an account with Rs. 100 but needs to deposit a minimum of Rs. 500 in a financial year. The maximum amount one can deposit in a financial year should not exceed Rs. 1,50,000. The deposits can be made in lump-sum or in 12 installments. The maturity period for PPF account is 15 years but it can be extended within one year of maturity for further 5 years and so on.
Post office National savings certificates (NSCs)
National savings certificates (NSCs) offer an interest rate of 8 per cent per annum. The minimum amount required for opening NSC account is Rs. 100 in multiples of Rs. 100. There is no upper limit on NSC investments. An NSC of Rs. 100 will offer Rs. 146.93 on maturity after five years. National Savings Certificates (NSCs) have a lock-in period of five years, stated India Post.
Post office Kisan Vikas Patra (KVP) account
Post office Kisan Vikas Patra certificates offer an interest rate of 7.7 per cent per annum. A Kisan Vikas Patra account can be opened in a post office against a minimum of Rs. 1,000. There is no upper limit on the amount that can be invested in a Kisan Vikas Patra (KVP) account. The interest is compounded annually. The amount invested in a KVP doubles in 112 months (9 years and 4 months).
Post office Sukanya Samriddhi Account
The current interest rate on sukanya samriddhi account is fixed at 8.5 per cent per annum. It is calculated and compounded on a yearly basis. It is a government-run account for the girl child and requires a minimum and maximum investment of Rs. 1,000 and Rs. 1,50,000 in a financial year respectively. A guardian can open only one account in the name of one girl child and maximum two accounts in the name of two different girl children, as stated by India Post on its official website.