For those willing to invest in secured investment pools and get assured returns, the post office provides a plethora of deposit schemes. These deposit schemes are also widely considered as 'Small Saving Schemes'. They are backed by the central government of India and hence these schemes offer sovereign guarantee. Under Section 80C of the Income-Tax Act, 1961, some of these schemes, such as NSC, SCSS, etc., also provide tax-saving benefits. Interest rates on these schemes are evaluated by the government and determined on a quarterly basis. Here is a view in short of these schemes.
SCSS (Senior Citizen Savings Scheme)
This scheme is only for senior citizens those aged 60 years and above. In order to get regular interest income SCSS is the most preferred investment pool among senior citizens after fixed deposits of banks. Interest is payable on a quarterly basis under this scheme. SCSS comes with a lock-in tenure of 5 years and also premature withdrawal facility is allowed (with a penalty) after the completion of one year. The maximum amount that can be invested by any individual in this scheme is currently restricted at Rs 15 lakh. It is possible to open the account individually or jointly with your spouse. Only through cheque deposits above Rs 1 lakh will be approved. Under section 80C, the scheme counts for a tax deduction as well.
Sukanya Samriddhi Yojana
This small savings scheme falls under the campaign 'Beti Bachao Beti Padhao' and holds the tax exempt status as exempt-exempt-exempt (EEE). This ensures that the amount of the investment, the interest received and the amount of the maturity are completely exempted from tax. One account per girl child and a limit of two accounts in the name of two girl child can be opened by parents or legal guardians. After 21 years of completion, the maturity amount is payable. If the minimum amount required is not contributed in a single fiscal year, a penalty will be imposed to the account holder.
Public Provident Fund (PPF)
Another great investment approach that retains the tax status as exempt-exempt-exempt is PPF. Since it comes with a 15-year lock-in term, partial withdrawal from the seventh year onwards is permitted. The loan facility is also available effective in the third year. Remember that in favour of unpaid debt or liability, the PPF account can not be placed by an individual or organization. Though a judicial order or declaration can not make a person eligible to use money from PPF accounts to clear his or her debts.
Post Office Savings Scheme Interest Rates
|Post office deposit schemes||Min amount||Max amount||ROI in % for the quarter of Oct - Dec 2020|
|Sukanya Samriddhi Yojana||Rs 250||Rs 1.50 lakh||7.6|
|Senior Citizen Saving Scheme||Rs 1000||Rs 15 lakhs||7.4|
|Public Provident Fund||Rs 500||Rs 1.5 lakh p.a||7.1|
|Kisan Vikas Patra||Rs 1000||No upper limit||6.9|
|5-Year NSC VIII Issue||Rs 1000||No upper limit||6.8|
|Post office time deposit||Rs 1000||No upper limit||5.50 to 6.70|
|Post office monthly income scheme||Rs 1000||Rs 4.5 lakh for single holder||6.6|
|Post office monthly income scheme||Rs 1000||Rs 9 lakh for joint holders||6.6|
|Post office RD||Rs 100||No upper limit||5.8|
|Post office savings account||Rs 500||No upper limit||4.0|
5-Year NSC-VIII Issue
National Savings Certificates (NSC) fall with a five year lock-in span. Investment can be rendered either individually, jointly or on behalf of a minor in this scheme. Under section 80C, the scheme also counts for a tax deduction. The interest is not incurred here, but rather re-invested. Except for the 5th year, the re-invested interest is also liable for a tax deduction under the section 80C.
Post Office Time Deposit
Time deposits similar to a bank FD are also supported by the post office. For any of the four tenures, 1, 2, 3, and 5 years, a Term Deposit (TD) can be generated. In the scheme, even a minor over the age of 10 years can invest. Under section 80C, a five-year term deposit also provides tax breaks.
Post Office Monthly Income Scheme
POMIS only provides investors with monthly interest payment. Individuals (whether individually or jointly) or minors aged 10 years or older can invest in the scheme for a tenure of 5-years. Interest profit will be auto-credited into the bank account of the holder at the same post office. After the completion of one year, the premature withdrawal facility can be utilized by paying the required penalty amount.
Kisan Vikas Patra
This is a double digit return scheme, where your invested amount will be double if you consider this scheme. The government reviews the interest rate on a quarterly basis just like other small savings schemes and, thus, the duration in which the capital deposited doubles differs with this rate of interest. Usually, the ROI and tenure remain unchanged for one quarter.
Post Office Recurring Deposits
One can open a 5-year post office RD account in order to deposit small fixed amounts of money at regular intervals. The number of accounts that can be opened does not have a limit. For every deposit of Rs 5, there is a standard fee of Rs 0.05. The account will be terminated after 4 regular failures, but can be restored within two months. The rebate is provided in respect of deposits made six months or more prior to the due date. After maturity, it is possible to extend the RD account for another five years.
Post Office Savings Account
You can open a post office savings account and thus the interest is charged on the balance in the savings account by the post office just like a bank savings account. You can only open an account with cash with a minimum of Rs 20 and no upper threshold. The minimum balance to be maintained for a non-cheque facility account is Rs 50. The minimum balance of Rs 500 is to be maintained in order to take advantage of the cheque facility respectively.