All about Post Office Deposit Schemes

Posted in: Investment | on: July 16, 2020

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The Post Office offers wide range of deposit schemes in the name of Small Savings Scheme for those who wish to invest. As these schemes are backed by the Central Government, it offers safety and assurance to your investment. These schemes are offered around 1.54 lakh post offices across India. Under Section 80C of the Income Tax Act, certain deposit schemes such as Senior Citizen Savings Scheme (SCSS), National Savings Certificate (NSC) fall under tax-saving schemes. Let's take a look on different post office deposit schemes in detail.

Post Office Deposit Schemes:

The list of deposit schemes offered in post offices are,

  1. Post Office Savings Account
  2. Post Office Recurring Deposit (RD)
  3. Post Office Time Deposit (TD)
  4. Post Office Monthly Income Scheme (MIS)
  5. Senior Citizen Savings Scheme (SCSS)
  6. Public Provident Fund (PPF)
  7. National Savings Certificates (NSC)
  8. Kisan Vikas Patra (KYP)
  9. Sukanya Samriddhi Yojana (SSY)

Post Office Deposit Schemes - Current Interest Rates 2020:

Scheme Interest Rate Minimum Amount Maximum Amount
Post Office Savings Account 4% per annum Rs. 500 No maximum limit
Post Office Recurring Deposit 5.8% per annum Rs. 100 No maximum limit
Post Office Time Deposit 5.5% - 6.7% per annum Rs. 1000 No maximum limit
Post Office Monthly Income Scheme 6.6% per annum Rs. 1000

Single Account: Rs. 4.5 lakh

Joint Account: Rs. 9 lakh

Senior Citizen Savings Scheme 7.4% per annum Rs. 1000 Rs. 15 lakh
Public Provident Fund 7.1% per annum Rs. 500 Rs. 1,50,000
National Savings Certificate 6.8% per annum Rs. 1000 No maximum limit
Kisan Vikas Patra 6.9% per annum Rs. 1000 No maximum limit
Sukanya Samriddhi 7.6% per annum Rs. 250 Rs. 1,50,000

Features of Post Office Deposit Schemes:

1. Post Office Savings Account:

  • Post office savings account can be opened by an adult/ minor above 10 years of age/ a guardian in the case of minor or mentally ill person.
  • Account opening can be done through cash only.
  • Nomination facility is available both at the time of opening of account and after it.
  • Account is transferable from one post office to another.
  • Interest earned up to Rs. 10,000 per annum is exempted from tax from FY 2012-13.
  • Only one account can be opened in a post office.
  • For the account to be active, minimum one transaction is necessary.
  • Once the minor turns to major, he/she has to convert the account to his/her name.

2. Post Office Recurring Deposit:

  • Post office recurring deposit account can be opened by an adult/ minor above 10 years of age/ a guardian in the case of minor or mentally ill person.
  • Account opening can be done by cash/ cheque.
  • The maturity period will be 5 years after the account opening date. However, the date can be extended to another 5 years by submitting application.
  • Premature closure is available after three years from the account opening date.
  • Numerous accounts can be opened in numerous post offices.
  • The default fee is Rs. 1 for the deposit amount Rs. 100. The account will be discontinued after 4 regular defaults but can be restored in two months
  • For advance deposit of minimum 6 installments, rebate of Rs. 10 for 6 months and Rs. 40 for 12 months will be paid.
  • Once the minor turns to major, he/she has to convert the account to his/her name.
  • Online deposit facility is available through IPPB savings account/ mobile banking/ net banking.

3. Post Office Time Deposit:

  • Post office time deposit account can be opened by an adult/ minor above 10 years of age/ a guardian in the case of minor or mentally ill person.
  • Account opening can be done by cash/ cheque.
  • 5 years Time Deposit is applicable for tax benefit under Section 80C of the Income Tax Act, 1961.
  • Premature withdrawal is applicable only after 6 months.
  • Single account can be changed to joint account and vice-versa.
  • Time Deposit can be further extended by submitting application.
  • Account can be opened in online through net banking/ mobile banking.
  • Once the minor turns to major, he/she has to convert the account to his/her name.

4. Post Office Monthly Income Scheme:

  • Post office monthly income scheme account can be opened by an adult/ minor above 10 years of age/ a guardian in the case of minor or mentally ill person.
  • Account opening can be done by cash/ cheque.
  • The maturity period is 5 years.
  • Premature withdrawal is allowed after one year with penalty.
  • Investors will be paid monthly interest which will be auto-credited to their savings account.
  • Nomination facility is available both at the time of opening of account and after it.
  • Single account can be changed to joint account and vice-versa.
  • Minors have to apply for conversion of account to their name after becoming major.

5. Senior Citizens Savings Scheme:

  • Senior citizens savings scheme account can be opened by an individual who is 60 years of age and above.
  • The maturity period is 5 years.
  • The investor can manage single account in individual or joint account with spouse.
  • Account opening can be done by cash if the amount is below Rs. 1 lakh and by cheque if the amount is above Rs. 1 lakh.
  • If the interest amount is above Rs. 50,000 per annum, TDS will be deducted.
  • Investment under this scheme is eligible for tax benefit under Section 80C of the Income Tax Act, 1961.
  • Premature withdrawal is allowed after one year with penalty.

6. Public Provident Fund:

  • Public Provident Fund account can be opened by an individual who must be a citizen of India.
  • Only one account is allowed and joint account cannot be opened.
  • The maturity period is 15 years and it can be extended further for 5 years and more within 1 year of maturity.
  • Deposits made under this scheme is eligible for tax deduction under Section 80C of Income Tax Act.
  • Interest earned is totally exempted from tax.
  • Premature withdrawal is allowed after five years from the end of the account opening year.
  • The account can be opened in all departmental post offices.

7. National Savings Certificate:

  • The National Savings Certificate can be bought by an adult/ minor above 10 years of age/ a guardian in the case of mentally ill person.
  • Deposits are eligible for tax refund under Section 80C of Income Tax Act.
  • The accumulated annual interest will be reinvested under Section 80C of Income Tax Act.
  • The maturity period is 5 years.
  • NSC will be given in the form of Passbook.

8. Kisan Vikas Patra:

  • The certificate can be bought by an adult/ minor above 10 years of age/ a guardian in the case of mentally ill person.
  • KVP will be provided in the form of Passbook.
  • Encashment of certificate will be available after two and a half years from the date of provision.
  • Nomination facility is available.
  • The certificate is transferable and it can be bought in all departmental post offices.

9. Sukanya Samriddhi Account:

  • The account can be opened by a legal/ natural guardian in the name of girl child.
  • Only one account can be opened in the name of one girl child.
  • The account can be opened up to 10 years of age from the date of birth.
  • The account can be closed after the completion of 21 years of age.
  • In the event of marriage, premature withdrawal will be allowed after the completion of 18 years of age.
  • Deposits should be made up to the completion of 15 years from the account opening date.


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