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Post Office Small Savings Schemes: Know The Interest Rates And Key Features

Post office interest rates are revised by the government from time to time to allow small investors to meet their financial requirements and achieve goals.

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Outlook Money
January 29, 2024
Post Office Small Savings Schemes

Post Office Small Savings Schemes

India Post runs several schemes for small investors to meet their long- and short-term financial goals with guaranteed interest rates that are revised by the Ministry of Finance from time to time, enabling them to address needs like children’s education, marriage, savings, etc. Let’s understand more about the Post Office Small Savings Scheme, its revised interest rates, and key features.

These schemes come with different investment durations and interest rates, allowing small investors to plan savings for retirement and other financial needs.

Post office schemes include savings accounts, recurring deposit accounts, time deposit accounts, monthly income schemes, fixed deposit schemes, Sukanya Samriddhi accounts, Kisan Vikas Patra, etc. Additionally, you can open the Senior Citizen Savings Scheme (SCSS) account and the Public Provident Fund (PPF) through the Post Office and banks. With the Lok Sabha elections due this year, the government will present its interim budget on February 1, and after the elections, a full budget will be unveiled for FY2024-25. For investors, the budget is a major annual event as the government typically outlines the key areas of spending and policies that influence rates.

Here are some important post office schemes and their current interest rates:

Also Read: How Can NRIs Invest In The National Pension System (NPS)?

Post Office Savings Account

The post office savings account gives 4 per cent interest annually. The minimum deposit is Rs 500 with no maximum limit. You can open a single or a joint account with facilities like a checkbook, ATM card, net and mobile banking, etc. It also provides tax deductions up to Rs 10,000 under Section 80TTA of the Income Tax Act.

Recurring Deposit Account (RD)

The Recurring Deposit Account is for five years. The minimum monthly deposit is Rs 100 with no upper limit. It offers 6.5 per cent interest annually, compounded quarterly. A loan facility of up to 50 per cent is also available against the deposited amount after 12 consecutive instalments.

Time Deposit Account (TD)

A time deposit account has four tenures: 1, 2, 3, and 5 years. The minimum deposit is Rs 1,000 with no upper limit. The interest is calculated quarterly but payable annually. The interest rate for 1, 2, 3, and 5 years is 6.9, 7.0, 7.0, and 7.5 per cent per annum, respectively. Investors can avail of tax benefits for a five-year investment under Section 80C. TDS (tax deducted at source) will apply if the interest earned in a year is over Rs 40,000. For senior citizens, it is Rs 50,000.

Monthly Income Scheme Account (MIS)

The minimum and maximum deposits for a single account are Rs 1,000 and Rs 9 lakh, respectively; for a joint account, the maximum is up to Rs 15 lakh. The MIS account offers 7.4 per cent annually and matures in five years. Premature closure is allowed after a year with penalties.

National Savings Certificates (NSC)

It has a maturity period of five years. The minimum deposit is Rs 1,000 with no defined maximum limit. The interest rate is 7.7 per cent, compounded annually but paid at maturity. One can open multiple accounts under the scheme. The contributions to the scheme qualify for tax deductions under Section 80C. The National Savings Certificate (NSC) can be pledged as a security with scheduled or cooperative banks.

Kisan Vikas Patra (KVP)

KVP matures in 10 years. The minimum deposit is Rs 1,000 with a 7.5 per cent interest annually. Like NSC, KVP can be pledged as a security with scheduled or cooperative banks.

Sukanya Samriddhi Accounts (SSA)

The Sukanya Samriddhi Account can be opened only for the girl child below 10 years. Parents or guardians can maintain the account till she reaches 18. It matures in 15 years from the date of account opening. The minimum deposit is Rs 250, and the maximum is Rs 1.5 lakh in a financial year. It offers 8 per cent interest per annum, calculated and compounded annually. The interest earned is tax-exempt. The deposits qualify for deduction under Section 80C of the I-T Act.

Besides these schemes, you can also open a Senior Citizen Savings Scheme (SCSS) account and a Public Provident Fund Account (PPF).

Senior Citizen Savings Scheme (SCSS): This government-backed retirement scheme allows senior citizens to make a lump sum deposit of a minimum of Rs 1,000 up to Rs 30 lakh. One can open the account individually or jointly with a spouse. It matures in 5 years with the option to extend indefinitely in blocks of three years. The scheme offers 8.2 per cent per annum, payable quarterly. Individuals who are 60 or older can open the account. The deposits under this scheme qualify for deduction under Section 80C of the Income Tax Act.

Public Provident Fund Account (PPF): PPF has a maturity period of 15 years, with tax deductions of up to Rs 1.5 lakh allowed in a financial year under Section 80C of the Income Tax Act. You can deposit a minimum of Rs 500 in a year to keep the account open, and the upper limit is Rs 1.5 lakh in a financial year.

The scheme offers 7.1 per cent interest per annum and compounded annually. The PPF account can be extended indefinitely in blocks of five years after maturity.

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