India Post offers various savings schemes at its over 1.5 lakh post offices that are present in both rural and urban areas. Some of the savings schemes that are offered by India Post are mentioned below:
- Sukanya Samriddhi Accounts
- Kisan Vikas Patra (KVP)
- National Savings Certificate (NSC)
- 15-year Public Provident Fund Account (PPF)
- Senior Citizens Savings Scheme (SCSS)
- Post Office Monthly Income Scheme Account (MIS)
- Post Office Time Deposit Account (TD)
- 5-Year Post Office Recurring Deposit Account (RD)
- Post Office Savings Account
The SCSS and PPF schemes offered by India Post are among the most popular schemes. The interest rates on the returns are 8.7% p.a. and 8% p.a. for the Senior Citizens Savings Scheme and the 15-year Public Provident Fund scheme, respectively.
The two savings schemes also help in saving tax when filing for Income Tax (IT) returns. The main features of the two schemes are mentioned below:
15-year Public Provident Fund Account offered by India Post
The features of the PPF scheme are mentioned below:
- The rate of interest under PPF is 8% p.a. and it is compounded on a yearly basis.
- The minimum and maximum amount that an account holder can deposit in a financial year are Rs.500 and Rs.1.5 lakh, respectively.
- An individual must pay Rs.100 to open a Post Office PPF account.
- Joint accounts cannot be opened under this scheme.
- Individuals can add nominees when opening a PPF account or even after opening a PPF account. The PPF account can also be transferred from one post office to another.
- The maturity period for a PPF account is 15 years. However, individuals can extend it for a further 5 years, but it must be done 1 year before maturity.
- Premature closure of the account cannot be done by the account holders before 15 years.
- The interest that is earned is completely tax-free.
- After the third financial year of opening the account, a loan can be availed against the PPF account. No security or collateral needs to be submitted for availing a loan.
- Individuals can open a PPF account by paying the amount in the form of cheque or cash. However, if individuals pay the amount by cheque, the date that the cheque realises will be the date the account is opened.
- Account holders will be able to open the account on behalf of a minor. However, the minimum amount must be deposited in the account for the financial year.
- The value of maturity can be kept the same even without making further deposits or extension.
- Under Section 80C of the Income Tax Act, tax deductions can be availed on the deposits.
- From the seventh financial year of opening the account, withdrawals can be made.
- Only at Post Offices which are Double handed and above can a PPF account be opened at. Bankbazaar provides the information about PPF account, Interest rates, Benefits and Key features.
Senior Citizens Savings Scheme offered by India Post
Given below are the features of the SCSS offered at post offices:
- The rate of interest under an SCSS account is 8.7% p.a.
- The minimum and maximum amount that can be deposited in an SCSS account are Rs.1,000 and Rs.15 lakh, respectively.
- Individuals above the age of 60 years old are eligible to open an SCSS account.
- The maturity period for an SCSS account is 5 years.
- In case individuals are paying less than Rs.1 lakh to open an SCSS account, the payment can be made by cash. However, for amounts more than Rs.1 lakh, the payment must be made by cheque. In case of cheque payments, the date that the cheque realises is the opening date of the account.
- Individuals can add nominees at the time of opening the account or after opening the account.
- There is no limit to the number of SCSS accounts that can be opened. However, the maximum investment limit applies to all the accounts.
- The interest that is generated from an SCSS account can be added to a Post Office Savings Account. The transfer can be done via Post-date Cheque (PDC) or Money Order.
- The interest that is generated every quarter for an SCSS account that is present at CBS Post Offices, can be transferred to the savings account that is present at any other CBS Post Offices.
- Individuals can extend the maturity period for a further 3 years. However, the request must be made 1 year before the account matures. The account can also be closed one year after maturity. The individual need not pay any extra charges as well.
- Individuals who are 55 years old and below 60 years old and have retired under the Voluntary Retirement Scheme (VRS) or on superannuation can open an SCSS account. However, the account must be opened within one month from the time the individual receives the retirement benefits and the amount should not exceed the retirement benefits amount.
- Individuals can open multiple accounts as well as open a joint account with his/her spouse. However, joint accounts can only be opened with the spouse and the investor of the account is the first depositor.
- Individuals can transfer the SCSS account from one post office to another.
- Quarterly interests are paid on the initial working day of April, July, October, and January, respectively. The payment of interest on a quarterly basis is applicable at CBS Post Offices only.
- Premature closure is allowed after one year from the date the account was opened. However, there is a 1.5% and 1% charge on the deposit that is levied for premature closure after 1 year and 2 years, respectively.
- If the interest that is earned is more than Rs.10,000 p.a., TDS is deducted at source. Under Section 80C of the Income Tax Act, 1961, tax benefits can be availed for investments under the scheme.
India Post offers various savings schemes where the interest rates range from 4% p.a. to 8.7% p.a. It is vital that individuals do thorough research on all the schemes offered by India Post before investing in one.