Besides postal services, the Post offices in India also offer an array of government social security schemes. The PO Savings Bank Account is their flagship product that helps save money and build corpus for retirement through compounding over a specific period. The service has a vast customer base of over 1.55 Lac that allows people to use their money efficiently.
The functioning of Post Office savings account is similar to the savings account offered by the banks. After the announcement of total Post Office integration by Finance Minister, all the services have gone digital to offer services even at remote corners of the country.Â
Here are some essential features the Post Office savings account offers:Â
All individuals can hold one account under their name at any post office across the country.Â
The accountholder operates singly or jointly, depending on its nature.
A joint account is confined to two account holders only. Upon death, it automatically converts in the survivor’s name. Â
Nomination is mandatory while opening the account.
The minimum balance in the account is Rs.500, and you cannot withdraw for balances below the threshold.
The Post Office Savings Account provides electronic facilities like net banking, mobile banking, ATMs, and online transfer between two post office accounts.Â
Post Office Savings Account Interest Rate
The Ministry of Finance notifies the Post Office Savings Account interest rate. The current rate is 4% per annum, reckoning the lowest balance between the 10th and last day of a month for interest calculation. However, you do not earn any interest if the minimum balance is below the Rs 500 threshold.Â
Furthermore, the accrued interest gets credited at the end of each financial year. Finally, the interest applies up to the month previous to account closure.Â
Let us look at the interest rates applicable to the other Post Office schemes.Â
S. No.
Scheme NameÂ
Interest RateÂ
Compounding FrequencyÂ
1
1 Year Time DepositÂ
5.5%
Quarterly
2
2 Year Time DepositÂ
5.5%
Quarterly
3
3 Year Time DepositÂ
5.5%
Quarterly
4
5 Year Time DepositÂ
6.7%
Quarterly
5
5 Year Recurring DepositÂ
5.8%
Quarterly
6
Senior Citizens Savings SchemeÂ
7.4%
Quarterly and disbursedÂ
7
Monthly Income SchemeÂ
6.6%
Monthly and disbursedÂ
8
National Savings Certificate (VIII)Â
6.8%
Annually
9
Public Provident Fund
7.1%
Annually
10
Kisan Vikas PatraÂ
6.9%
Annually
11
Sukanya Samriddhi AccountÂ
7.6%
Annually
Post Office Savings Account Eligibility
Open the account in any post office with the following eligibility criteria:
An adult operating singly or jointly with another adult individual.
Minor account under a guardian or self-operated if 10 years and above.
Similarly, a person with unsound minds under a guardian.
Under no circumstances can a person hold more than one account regardless of the status.
While the minimum opening deposit is Rs 500, there is no upper limit.
Post Office Savings Account Service Charges
It is essential to be conversant with the service charges to comply with them from time to time after opening the savings account.Â
Facility/ EventÂ
Charge/ Fee (Rs)
Savings Account Cheque BookÂ
Up to 10 leaves in Financial Year: Free Additional: Rs 2 per leaf
Duplicate Cheque Book IssueÂ
Rs 50
Cheque DishonorÂ
Rs 100 per occasion
Deposit Receipt IssueÂ
Rs 20 per receipt
Account StatementÂ
Rs 20 per statementÂ
Account TransferÂ
Rs 100
Account PledgingÂ
Rs 100
Nomination Change or Cancellation
Rs 50
Passbook replacing Mutilated Certificate
Rs 10 per certificate
Account MaintenanceÂ
Rs 50
The above service charges/ fees are subject to the application of GST.
Post Office Savings Account Deposit and Withdrawal Rules
You must be aware of the Post Office Savings Account transactions rules:Â
While the deposits are a minimum of Rs 10, the minimum amount to withdraw is Rs 50. In addition, all transactions must be in whole rupees only.Â
You must present the passbook if the withdrawal is without a cheque
You cannot transact in the silent/ dormant account until you revive it, complying with the rules.Â
You must deposit the shortfall amount if the balance is below the minimum prescribed Rs 500. Else you pay a maintenance fee from the account.Â
On the other hand, your account stands automatically closed if the balance is nil due to recoveries.Â
Post Office Savings Account Benefits
The Post Office Savings account compares with the best today in terms of facilities after completely going digital. Accordingly, you benefit in the following ways:
Cheque Facility: The account provides a CTS cheque facility for clearing services across the country.Â
ATM/ Debit Card: Account holders can apply for ATM/ Debit Cards, subject to compliance with the minimum balance norms since post offices are on the CBS platform.Â
Minor Account: The account converts into a standard account once the minor turns 18. However, submit KYC documents and an account opening form afresh.
Joint Holdings: Though you can open a joint account with another individual, you cannot convert the account into a single one and vice versa.Â
Account Dormancy: The account is dormant in the absence of transactions over three consecutive years. However, submit an application form with supporting KYC documents to activate. Â
Additional Facilities: Apart from enjoying all the electronic powered facilities, you can additionally request the following:
Aadhaar Seeding
APY (Atal Pension Yojana)
PMSBY (Pradhan Mantri Suraksha Bima Yojana)Â
PMJJY (Pradhan Mantri Jeevan Jyoti Yojana)
Tax Exemptions: Interest earned in a financial year up to Rs 10,000 is tax-exempt under Section 80TTA of the IT Act, 1961.
In Conclusion
With its savings account services, Post Offices have been able to reach the remotest corners while offering corpus building. Besides, the post office has embraced CBS system for smooth operations.
Post offices not only offer these services or schemes but also has decent interest rate that helps people gain passive income or wealth accumulation. You can also find other wealth accumulation schemes at your nearest post office.
Always remember to ask a professional for service or scheme details before making the final investment.
FAQ's
Is the portability available to the Post Office Savings Account?
Yes, you can port the account to a Post Office in your vicinity on your relocation or if the services in the parent office are dissatisfactory.
Is the Post Office Savings account enabled for receiving Direct Benefit Transfer (DBT)?
Yes, after Aadhaar seeding, you can link your Post Office Savings Account for DBT.Â
What happens if your interest income in the Post Office Savings Account Exceeds Rs 10,000 in a financial year?
The amount over Rs.10000 is added to your gross earnings under the other income category and taxed at the applicable tax slab rate.Â
Can you deposit Rs.10 Lac in your Post Office Savings Account?
Yes, you can deposit as there is no amount cap. But you must disclose the fund source according to the Anti Money Laundering Act, 2002.
What is the fate of a joint PO Savings Account if one account holder passes away and the survivor has a single account in his name?
The account title changes to the survivor’s sole name. However, the account will be closed if the survivor already holds one.
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