Post Office Savings Schemes appeals to masses

Post office savings schemes provides security of capital and interest thereon and are best suited for conservative investors. The popularity of Post office savings schemes can be contributed to the fact that it appealed to every section of the society, rich or poor.

The large network of India Post made these schemes accessible across the nation. India Post has a post office present in the remotest possible corner of India. The reach of post offices is much greater than that of largest banks.

Government of India recognizing the potential of India Post’s network, introduced delivery of regular banking products and services through various Post Office Savings Schemes. There are a variety of investment schemes available with the Post Office. These schemes are risk free as they are backed by Government of India.

Two of such schemes Public Provident Fund and National Savings Certificates have already been discussed in detail earlier. Some of the other currently active schemes are listed here :

Kisan Vikas Patra

• Interest Payable, Rates , Periodicity etc. : Money doubles in 8 years & 7 months. Facility for premature encashment as per the table given below:

Period	Amount payable Inclusive of interest
2 years 6 months or more but less than 3 years	1170.51
3 years or more but less than 3 years 6 months	1207.95
3 years 6 months or more but less than 4 years	1267.19
4 years or more but less than 4 years 6 months	1310.80
4 years 6 months or more but less than 5 years	1355.90
5 years or more but less than 5 years 6 months	1435.63
5 years 6 months or more but less than 6 years	1488.49
6 years or more but less than 6 years 6 months	1543.30
6 years 6 months or more but less than 7 years	1649.13
7 years or more but less than7 years 6 months	1713.82
7 years 6 months or more but less than 8 years	1781.06
8 years or more but less than 8 years 7 months	1850.93

• Denominations & Investment limits : Rs. 1,000/- denomination certificate. No limit on investment. Available in denominations of Rs. 100/-, Rs. 500/-, Rs. 1000/-, Rs. 5000/-, Rs. 10,000/-, in all Post Offices and Rs. 50,000/- in all Head Post Offices.
• Salient Features Including Tax Rebate : A single holder type certificate may be issued to :
  • An adult for himself or on behalf of a minor or to a minor;
  • Jointly by two adults
  • A trust

Post Office Monthly Income Scheme

• Suitable for : This scheme is suitable for people looking for regular income from their investments, specially retired individuals. This scheme provides monthly income to the investor on investment of a one-time lumpsum amount.
• Interest Payable, Rates , Periodicity etc. : It gives an annual interest of 8%. i.e. Rs. 80/- will be paid every month on a deposit of Rs 12000/-. Earlier in addition to the interest a 10% bonus was also paid to depositors on maturity after completion of 6 years, however this has been withdrawn now.
• Denominations & Investment limits : In multiple Rs. 1000/- Maximum Rs. 3 lakhs in Single account and Rs. 6 lakhs in joint account
• Salient Features Including Tax Rebate : Maturity period is 6 years. Can be prematurely encashed after one year at 3.5% discount. However, no such deduction shall be made if the account is closed after three years from the date of opening of such account. Interest is exempted from Income Tax under Income Tax Act.

Post Office Senior Citizen Scheme

• Suitable for : The Scheme is for the benefit of senior citizens and maturity as it provides a high rate of interest as compared to bank interest of 4.5- 4.75%. Although the interest on the deposit is taxable, the deposits themselves are tax free. Citizens of 60 years of age and above are eligible to invest. Single or joint account (with spouse only) can be opened. Citizens who have retired under a voluntary or a special voluntary retirement scheme and have attained the age of 55 years are also eligible, subject to specified conditions.
• Interest Payable, Rates , Periodicity etc. : It gives an annual interest of 9% per annum (taxable).
• Denominations & Investment limits : The minimum investment is 1000Rs and in multiples of Rs.1000 subject to a maximum of Rs.15 lakh.
• Salient Features Including Tax Rebate : The maturity period of the deposit is five years, which can be extended by another three years. Premature withdrawal after a period of one year is allowed, subject to some deductions. The investments in the scheme will be non-tradable and non-transferable. However, nomination facility will be available. NRIs and Hindu Undivided Families are not eligible to invest in the scheme. Interest earned is taxable under Income Tax Act.

Post Office Recurring Deposit Account

• Suitable for : This scheme allows investors to invest a fixed sum of money every month for a period of 5 years. Low investment limits make this scheme a good option for people in low income group and people living in remote areas where normal banking facilities are very limited.
• Interest Payable, Rates , Periodicity etc : The interest paid is 7.5% per annum compounded quarterly. This means, on maturity Rs. 10/- account fetches Rs. 728.90. Can be continued for another five years on year to year basis.
• Denominations & Investment limits : Minimum Rs. 10/- per month or any amount in multiples of Rs. 5/-. No maximum limit.
• Salient Features Including Tax Rebate : One withdrawal upto 50% of the balance allowed after one year. Full maturity value allowed on R.D. Accounts restricted to that of Rs. 50/- denomination in case of death of depositor subject to fulfillment of certain conditions. 6 & 12 months advance deposits earn rebates. Interest earned is exempted from tax under Income Tax Act.

Post Office Time Deposit Account

• Suitable for : Similar to Bank Fixed Deposit, it provides an annual interest rate of between 6.25-7% compounded quarterly. Again, low investment limits make this scheme a good option for people in low income group and people living in remote areas where normal banking facilities are very limited.
• Interest Payable, Rates , Periodicity etc. : Interest payable annually but calculated quarterly.

Period	Rate
1-Year	6.25%
2-Year	6.50%
3-Year	7.25%
4-Year	7.50%

• Denominations & Investment limits : Minimum Rs. 200/-, and in multiple thereof. No maximum limit.
• Salient Features Including Tax Rebate : Account may be opened by individual, trust, regimental fund & welfare fund. 2,3 & 5 years account can be closed after 1 year at discount. Account can also be closed after six months but before one year without interest. Interest earned is exempted from tax under Income Tax Act.

Post Office Savings Account

• Suitable for : Similar to a normal Savings Account from any Bank. It is a safe instrument to park those funds, which you might need to liquidate fully or partially at very short notice. Post office savings accounts are especially suited for those living in rural and semi-rural areas where the reach of banks is very limited.
• Interest Payable, Rates , Periodicity etc. : 3.5 % per annum on individual /Joint and group accounts. 3% per annum on public accounts.
• Denominations & Investment limits : Minimum Rs. 50/- Maximum Rs. 1,00,000/-for an individual account. Rs. 2,00,000/- for joint account. No limit on group, Institutional or official capacity accounts.
• Salient Features Including Tax Rebate : Cheque facility available. Interest is completely tax free.