Post offices are one of the safest places where people can save the money. In India, every locality has a post office. Apart from accepting letters, parcels, money orders, the sale of postal cards, it also provides several savings schemes.
Saving in Post office schemes is one of the best things that an investor can do who is looking for zero risks and guaranteed return. The schemes offered by post-office is more popular among the middle-class people in India, as they prefer to invest in less risk and guaranteed return on their investment.
The invested amount will also fetch a certain rate of interest. The government of India will fix the rate of interest and it will be changed on a yearly basis.
Different types of Post Office Schemes
The following are the different types of savings schemes which post office offers:
- Post Office Savings Account (SB)
- Post Office Fixed Deposit Account (FD)
- Post Office Recurring Deposit Account (RD)
- Public Provident Fund Account (PPF)
- Post Office Monthly Income Account Scheme (MIS)
- Sukanya Samriddhi Account (SSA)
- Kisan Vikas Patra (KVP)
- National Savings Certificates (NSC)
- Senior Citizens Saving Scheme (SCSS)
Some savings schemes also provide tax benefits to the investors under Section 80C. Investment amount of up to INR 150000 per annum is eligible for tax exemption under Section 80C.
The following are the schemes which provide tax benefits Public Provident Account (PPF), Sukanya Samriddhi Account (SSA), National Savings Certificates (NSC) and Senior Citizens Saving Scheme (SCSS). The government will use the money collected from these schemes for various developmental projects.
One can maintain a minimum balance of INR 20 while opening a post office savings account. Nomination facility is also available for all the schemes. The account has to be opened by cash only. Post -office provides cheque book and a pass-book to the customers on opening the account.
An individual has to maintain a minimum balance of INR 500 to avail cheque book facility. Interest earned from the savings account is tax-free up to INR 10000 per annum.
An account can be opened in the name of a minor and upon attaining the majority he/she has to apply for conversion of account in his/her name. Joint accounts can also be opened and operated by two or three adults.
One can transfer the savings account from one post office to another by submitting form SB 10 (b), which is available in all the post offices or one can even download it online from the India Post website. The application can be submitted either in the transferring office or transferee office.
An individual can open any number of Recurring Deposit schemes. It is a five-year scheme. One can even avail loan on the recurring deposits. One time withdrawal facility is available up to 50% of the balance amount after one year in case of recurring deposit scheme.
Senior Citizens Savings Scheme
An individual who is 60 years or above can open Senior Citizens Savings Scheme (SCSS). If the interest earned is more than INR 10000 per annum then TDS will be deducted from the source of interest.
Premature closure of the scheme is available after one year on deduction of an amount equal to 1.5% of the deposited amount and 1% of the deposited amount after two years.