Post Office Savings Schemes in India
The Indian postal system boasts of being the largest postal network in the world with more than 1.5 lakhs post offices across the nation. It has been the backbone of communication as well as small savings schemes for more than 150 years now. Post Office has been involved in multifaceted functions and apart from delivering mails and saving schemes, it also deals in retail services like bill collection, sale of forms etc. It can be safely said that the Post Office has indeed played a pivotal role in the socio-economic development of the country, and no amount of technology like e-mails and smartphones can ever make post offices obsolete.
Savings, no matter however small, act towards making the future secure. Instead of keeping the savings either in the house with no returns, or in the bank with lesser returns, people in India have the option of opting for various schemes offered by the Post Office. Let’s take a look at what can be considered as small savings:
• Senior citizens drawing a pension generally end up making small savings which can be invested in the P.O. Savings Schemes.
• Housewives in India have the habit of setting aside a certain amount of money for that unforeseen expenditure. Generally within a few months, this money amounts to a small saving in itself which can be used in any of the Post Office Savings Schemes with good returns.
• Children can also be encouraged to save from their pocket money which can be later invested in the same.
• Instead of giving gifts or gift cheques, one can try the option of gifting a P.O Saving Scheme to a new born or to a newly-wed which will help them with capital returns in the near future.
The small savings schemes available at the Post Office have certain benefits:
• They have attractive interest rates.
• It is a flexible saving and can be transferred to any P.O. across India.
• At the end of the fixed term, the P.O. Savings Schemes give capital gains which can be used by the family to make capital investments.
• The Post Office Savings Schemes come without Tax Deduction at Source (TDS).
Various Savings Schemes at the Post Office:
• Post Office One Time Deposit Scheme – This scheme requires a minimum deposit of only INR 200. The maturity period varies from 1 – 5 years with an option of re-deposit on maturity. The interest rate ranges from 6.6 % to 7.4 % compounded quarterly as per the period of deposit.
• 5-Year Post Office Recurring Deposit Account- In this scheme, the minimum deposit is a mere INR 10. You can invest Rs 1,000 per month in a post office RD scheme for 5 years. Interest rate is 6.9% per annum (quarterly compounded). The savings account can be easily transferred from one P.O. to another in case of change of city due to transfer. This account can be opened in the name of a minor of 10 years and above.
• Post Office Savings Account- The minimum amount that can be deposited in this scheme is INR 20. However, to avail the option of cheque, or debit card facility in this scheme, one needs to have a minimum balance of INR 500. Interest earned is @ 4% p.a. and is tax free up to INR 10,000.
• Post Office Monthly Income Account Scheme: The minimum deposit required in this scheme is INR 1500. Easy transfer of the account from one P.O. is available. The account can be opened in the name of a minor of 10 years and above and the maturity period is 5 years at an interest of 7.3% per annum. The interest is payable monthly, which can also be drawn.
• Senior Citizen Savings Scheme: This scheme is tailor made for the senior citizens of India. Any person who is 60 years and above can avail of this scheme. An individual taking VRS at 55 can also opt for this scheme. A joint account can be opened with spouse. With a maturity period of 5 years at an interest of 8.3% p.a., availability of the option of premature closure at a nominal discount, and the option of withdrawing the interest, this scheme is indeed perfect for the senior citizens.
• 15 year Public Provident Fund Account: The account in this scheme can be opened with INR 100. However, within a year of opening the account, there has to be a minimum balance of INR. The maturity period under this scheme is 15 years at an interest of 7.6 % per annum (compounded yearly). A loan can also be drawn against this deposit after the 3rd financial year. The interest is completely tax free.
• National Savings Certificates (NSC): Under this scheme, there are two certificates available: 5 Years National Savings Certificate (VIII Issue) at an interest of 7.6 % compounded yearly. The interest on both the issues are payable only at maturity. This certificate can be purchased by an adult on behalf of a child and the deposit qualifies for tax rebate under Sec 80C of IT Act. The minimum deposit under this scheme is INR 100.
• Kisan Vikas Patra (KVP): Under this scheme, the minimum deposit is INR 1000 with no maximum limit. The amount invested doubles after 118 months with an option of en-cashing the same after 2 n1/2years. The interest rate for Kisan Vikas Patra is 7.3% p.a.
• Sukanya Samriddhi Accounts: This account has been specially tailor-made for the girl child. The legal guardian of a girl child can open this account in her name with a minimum deposit of INR 1000. The girl child should be 10 years of age before the account can be opened and it can be closed after her completion of 21 years. A premature closure is allowed only after the girl has attained 18 years of age. Rate of interest is at 8.1 % p.a. which is calculated on yearly basis.
For detailed information about the various savings schemes with the P.O. please visit http://www.indiapost.gov.in/POSB.aspx
Savings help in meeting expenditures for unexpected events and emergencies. And instead of letting this corpus sitting idle with no returns, it can be deposited in the various P.O. Savings Schemes which is easily accessible at a time of emergency. It is true that banks also pay a competitive interest rate as compared to the P.O. Savings Schemes. However, apart from tax benefits, with the post-office scheme, the investment grows at a pre-determined rate with no risk as it is backed by the government. Though RBI plans to cut the interest rates due to inflation taking a slide and the banks prying to stay competitive, the small savings schemes offered by the P.O. is the most secure option, assuring a safe future.