What is Post Office Saving Schemes?
Department of Posts offers many services to Indian citizens that are monitored and controlled by the Government of India such as delivering mail, delivering money by money orders, opening and depositing small saving accounts, offering Postal Life Insurance(PLI), Rural Postal Life Insurance (RPLI), providing retail services, Old age pension Plans, and many others.
Post office monthly savings scheme is the most reliable savings scheme that allows investing a maximum of ₹4.5 Lakh individually and ₹9 Lakh jointly. As an MIS plan, it allows investors to produce a stable monthly income.
Types of Post Office Saving Schemes
Indian Post office offers many post office saving schemes. As they are controlled by the government, all the investments are risk-free and provide good rate interests. These post schemes are developed by the government of India for the benefit of Indian citizens and encourage long term savings and pension plans.
These schemes are easy to understand and enroll, that is why they are famous in both urban and rural regions. They also provide the tax rebate to the taxpayers under Section 80C of the Income Tax Act
We are mentioning some of the popular post office saving schemes below and how you can take advantage of them.
Post Office Savings Account
Post office savings accounts are quite similar to bank saving accounts. You can open a savings account at a post office with just Rs.20 and you have to maintain the minimum balance of Rs.50. The Indian post office provides 4% post office interest rate which is better than many public and private sector banks. The only issue is an individual can open only one saving account with one post office. The amount deposited in the saving account is taxable. You can transfer money online in your post office savings account and you can also transfer your account from one to another post office.
Post Office Recurring Account
Post Office Recurring account is a 5 years post office scheme. Post office interest rate on this kind of account is 7.3% annually but compounded quarterly. Once you completed your tenure of 5 years investment. This plan allows you to invest monthly or periodically. You can start from the monthly payment of Rs.10 and will get the benefit of such a small amount as well. The only condition is you need to deposit the amount in multiples of 5. You can open as many Recurring Deposits as you want. They even allow you to open joint recurring accounts.
In case of emergency, you can withdraw the 50% of your initial investment after one year with interest. If you miss any monthly payments the post office will charge you 5 paise on every Rs.5 on your Recurring account.
Post Office Monthly Scheme Account (MIS)
Post office allows you to open an MIS account individually or jointly with the maximum investment limit of 4.5 lakh and 9 lakh respectively for a minimum 5 year period. This post office scheme is a long term investment plan and offers a very good rate of interest of 7.7% yearly. This post office saving plan is very popular among Indian citizens as it allows you to earn fixed monthly income over the investment. The interest in this scheme is higher than public and private banks provide on Fixed deposits. You can open this account for a minor as well and if a minor is above 10 years old, he/she can operate the account themselves.
Post Office Senior Citizen Saving Scheme (SCSS)
The Senior Citizen Savings Scheme is the most appealing plan for the retirees and if you think you are now too old to take the advantage of this scheme, well, worry not. The minimum age to take this plan is 60 years and if you are a voluntary retiree then at the age of 55 then you can even enroll for this plan from the month you start receiving your retirement benefits. The interest rate on this post office scheme is 8.7%. You can invest up to Rs. 15 lakh individually. SCSS plan allows you to open a separate or joint account with your spouse.
The maturity period for SCSS plans is 5 years. After the completion of tenure, you can extend your investment period for another 3 years. This Post office saving scheme also allows premature withdrawal with the penalty. At premature withdrawal after 1 year and 2 years, you have to pay the penalty of 1.5% and 1% respectively. You also get a tax rebate on SCSS under Section 80C of the Income Tax Act.
National Saving Certificate (NSC)
One can buy a National Saving Certificate (NSC) for the 5 years of maturity period. Post office provides an interest rate of 8% annually compounded every 6 months. You can only withdraw the deposited amount at the end of the maturity period. Though, you can transfer a National Saving Certificate to another person’s name before the completion of the maturity period. These certificates are tax-deductible. Anyone can buy these certificates for themselves and their children or minors. They are considered a good investment for the future of your kids and you can give them as well.
Sukanya Samriddhi Yojna
This plan is initiated by the government of India for the development of girl child and for resolving the issue related to their marriage and education to improve the birth ratio of a girl child. You can open this account with a minimum amount of Rs.250 to a maximum amount of 1.50 lakh yearly. You only have to make the regular payment for the next 15 years from the date of opening. The maturity period for this plan is 21 years or at the marriage of the girl child after the age of 18. Post office interest rate on this plan is 8.5% annually. You also get the exemption on the maturity amount under Section 80C.
Kisan Vikas Patra (KVP)
This scheme is introduced for the benefits of farmers. Just like NSC, Kisan Vikas Yojna is a certificate that you can purchase. The amount deposited in this certificate will double after every 9 years and 4 months. The Post Office provides an interest rate of 7.7% annually. These certificates are transferable. They don’t have any fixed maturity period. One can encash these certificates after 2.5 years of a minimum period. Kisan Vikas Patra is not eligible for tax deductions.
Benefits of Post Office Saving Schemes
The Department of Posts (DoP) offers many Post office savings schemes for the benefits of Indian citizens. Below we are mentioning a few of the benefits from post office saving schemes.
Easy Enrollment Process
The Ministry of Communication allows Indian citizens to invest in post office schemes. The documentation and application process is quite simple which encourages the people in rural and urban sectors to take part in the postal saving schemes.
Attractive Investment Returns
In comparison to bank savings accounts and schemes, post office savings schemes provide a Higher Rate of Interest. Moreover, these schemes are governed and regulated by the Government of India. In 2020, post office services have updated their rate of interest which varies from 4% to 9%.
Post office savings schemes are run by the Indian Government. Therefore, they are more secure than any other investment plans. Anyone can invest in post office saving schemes without losing any money and with a guarantee of higher returns.
Long Term Investments
Post offices are ideal for long term investments. Their maximum term is 15 years for PPF and Sukanya Yojna which you can extend further as well once you complete the required tenure. Long term plans provide higher returns and help to create a financial safety net for retirement purposes.
Tax rebate is one of the main advantages of investing in post office schemes. Post offices offer many saving schemes that provide tax exemptions such as PPF, NSC, and Kisan Vikas Patra, etc.
Range Of Products
The Department of Posts has offered a variety of Post office saving schemes. These schemes are compatible with everyone and in every region. Any individual from a low to high earning profile can make easy investments in the scheme from the short to long term.
As the post offices are available in every region all over India. There are more than 1.55 lakh post offices with easy accessibility to the investors.
Process of Investing In Post Office Saving Schemes
The enrollment process is quite easy for post office saving schemes. Anyone can invest in these schemes by following simple steps:
Step 1- Visit your nearest post office branch
Step 2- Select from the variety of the post office saving scheme, you want to invest your money.
Step 3- Fill out the application form and submit the necessary document and KYC with your Passport size Photograph. Your account will open once you submit these documents
Step 4- Now deposit your initial saving amount as per the post office saving plan you choose.