Post Office Saving Schemes

Post Office Savings Schemes explained in Detail

Post office savings has been in India since a very long time. India Post savings bank is one of the safest place to invest your hard earned money. Every 4th person in India holds an account in Post office savings.

It will not be an exaggeration if we say many of the financially stable families in India will have reaped high fruits at least once from post office savings. So what makes post office so special? What are the various savings options do post offices have to offer? 

We will see each of them in detail so that you can decide which saving scheme you might want to invest in.

Post Office Savings Account.

Saving account or SB account or POSB account as it is called, is similar to a normal savings account which you may have in any bank. All the facilities you have in a bank account will also be found in a Postal SB account. You can deposit and withdraw money at you wish. 

You will get interest rates around 4% and these interest rates change every quarter. Cheque book facility, ATM card and internet banking facilities are other things which you will also get.  Though the number of Post office ATMs is relatively less at the moment, you can use India post ATM in any bank ATM also.

India post offices have become CBS enabled, so you can make your transactions like deposit, withdrawals, passbook entries and much more at any post office across the country. Unlike banks where they force you to go to the home branches for many transactions.

You can get more in depth details about post office savings account here.

Please have a look at the number accounts in India Post Savings. There are around 35 crore accounts excluding the saving certificate holders. Can you possibly imagine how big India Post savings is? Do you now know, why people trust India Post? The numbers speak for themselves. Just have a look at it. 

A Glance of No Of Accounts In India Post - Source India Post Annual report for 2015-2016

Post Office Savings - Monthly Income Scheme ( MIS )

Post office Monthly Income Scheme is probably the most famous saving scheme post office has ever offered. It is the go to investment plan since a long time. In this scheme you will deposit a fixed amount. For this principle amount you will get interest at fixed rate. This interest amount will be paid to you every month. Isn't it great? It's like you are getting a salary.

That is the reason people have always shown their interest in investing in Post office Monthly income Scheme. No wonder there are more than 2 crore MIS accounts in India Post all over the country. But there are some restrictions for investing in Post office monthly income scheme. Per person a maximum limit of Rs.4.5 lakhs exists at the moment. It means you can only invest 4.5 lakhs.

For more details about Monthly Income scheme please go here.

Post Office Savings - Term Deposit (TD Account)

This account is similar to traditional fixed deposit accounts. You can invest a fixed amount for a fixed period of time. After the expiry of the committed period you will paid interest along with the principle.  Currently post office Term deposit account can be opened and operated for a period of 1 year, 2 years, 3 years and 5 years.

Investment made in 5 year post office term deposit account are exempted from income tax within the prescribed limits of the Income tax department. But the interest earned in this scheme is taxable.

To know more about the post office term deposit you can please visit here.

Post Office Savings - Saving Certificates (NSC/KVP)

No introduction is needed about the national saving certificates. Almost every one who falls under the taxable income category prefer to buy post office national savings certificate. All investment in NSC are not taxable similar to that of 5 year post office term deposit. 

But the interest earned is taxable. Period of investment if fixed for a term of 5 years at present. You cannot withdraw the amount invested in NSC before a period of 5 years. 

For more in depth analysis of Post office National savings certificate please click here.

Kisan Vikas Patra is an another for of saving certificates offered by India post office. It is similar to NSC but the period of deposit is much longer. At the end of the deposit period you will get double the amount of your investment. Currently the period of doubling is 124 months(10 years and 4 months). At one point this period was 5 years. Probably the highest interest ever paid by any financial institution for savings.

Unlike NSC, KVPs can be encashed at any time after a minimum period of 2.5 years. 

For more details about Kisan Vikas Patra scheme please visit here.

Post Office Savings - Senior Citizen Savings Scheme ( SCSS)

Post office senior citizen scheme is a bit similar to the monthly income scheme except that the interest pay out is done once in three months. You invest a fixed amount for a fixed period of 5 years and you will earn simple interest on the principle amount. 

This interest will be paid after every three months or in other words quarterly. Quarters end on the last day of June, September, December and March every financial year. So you can take payment on 1st day of July, October, January and April.

For more details about Post Office Senior citizen savings scheme please follow this link.

Post Office Savings - Recurring Deposit

Recurring deposit is next favourite saving scheme of the common people next only to Monthly Income Scheme. It's actually opposite of MIS. Every month you have to invest a fixed amount and at the end of fixed period you will be paid the principle amount along with the interest.

Small house holds are the most common customers of the scheme. Having said that this scheme is the favourite of the middle class people, this scheme also has some attractive features making even the higher income group to invest in this scheme to reap high benefits.

A post office recurring deposit scheme can be opened for a minimum period of 5 years. It can be later extended for another period of 5 years.

Post office also offers rebate for advance deposits. While there is penal interest for late deposits.

For an in-depth analysis of Post office recurring deposit scheme please click here.

Post Office Savings Scheme - Public Provident Fund

Public Provident Fund is by far the best scheme for all those who are in the tax paying slabs. Because all the investment made in Public provident fund is completely tax free. Even the interest you earn on PPF is also completely non taxable.

You won't believe that many people invest calmly in PPF and after the maturity period, the interest which you earn itself will be enough to run your house. High returns which are completely tax free, amazing isn't it.

Click here to know more about the deposit opportunities in public provident fund.

Post Office Savings - Sukanya Samruddhi Yojana Account

Sukanya Samruddhi yojana scheme is a great way to empower the girl child. It's a great scheme almost on par with the public provident fund. But the scheme is for a long period of 21 years. This scheme also offers complete income tax exemption on both the principle and interest.

From a minimum investment of Rs.1000/- per year to a maximum of Rs.150,000/-, this scheme is for every one. If you can invest a minimum of Rs.1000/- per month for 15 years, after the maturity period of 21 years you can get a lumpsum amount of more than Rs.600,000/- which is a huge amount considering the amount which we are depositing every month.

To know more about Sukanya Samruddhi yojana click here.

So these are the main saving options available from India Post. Do visit each scheme details and take the right decision to secure your future with Post office saving schemes.

If you have anymore doubts post office saving schemes please comment below.

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Cheers.