POSTAL SAVINGS SCHEMES

India Post, which has a network of more than 1.5 lakh post offices across the country, offers nine types of saving schemes viz.,

• Savings Account
• Five-year recurring deposit (RD)
• Time deposit or Fixed Deposit (FD)
• Monthly Income Scheme (MIS) account
• Senior Citizens Savings Scheme (SCSS)
• 15-year Public Provident Fund (PPF) and
• National Savings Certificates (NSC)

These can be verified from India Post’s website – indiapost.gov.in.   Interest rates on these post office saving schemes move in line with the Government’s interest rates on small savings schemes, which are revised on a quarterly basis.  Here are some of the key details about the small savings schemes offered at the post offices:

Minimum amount required to open accounts

• Customers are required to invest a certain sum of money as the minimum deposit in these post office saving accounts to ensure operability.
• A post office account under any of the small savings schemes except recurring deposit can (RD) be opened with a minimum investment of Rs. 20-1,500.
• For opening a five-year recurring deposit account, a minimum investment of Rs. 10 per month is required, according to the India Post website.

Following are the minimum investments required in different types of post office saving accounts:

Interest rates offered on post office saving schemes

• For the current quarter, ending on June 30, 2019, investment in post office small savings schemes fetch returns to the tune of 4-8.7 per cent, according to a Ministry of Finance statement dated March 29, 2019.
• India Post currently pays interest at the rate of 4 per cent per annum on deposit in its savings account, according to India Post’s website. Post office RD account offers an interest rate of 7.3 per cent while the MIS account offers an annual return of 7.7 per cent, according to India Post.
• In case of post office fixed deposit or time deposit account,
• Interest rates are available across four maturities namely one, two, three and five years.
• Investment in time deposits (TDs) of one-year, two-years and three-years maturity periods fetch an interest of 7 per cent.
• Five-year Time Deposit offers a return of 7.8 per cent.
• The PPF account and senior citizen savings scheme offer a return of 8 per cent and 8.7 per cent per annum respectively.
• NSCs and Kisan Vikas Patra fetcg 8 per cent and 7.7 per cent interest per annum respectively.
• The current interest rate on Sukanya Samriddhi account is fixed at 8.5 per cent per annum.

Saving schemes that offer tax benefits

Some of these post office saving schemes also qualify for income tax benefits.

Using post office saving schemes such as Time Deposit (TD), Senior Citizen Savings Scheme (SCSS), Public Provident Fund (PPF), National Savings Certificates, an investor can claim a deduction up to Rs. 1.5 lakh in a financial year from taxable income under Section 80C of the Income Tax Act, 1961.