Post Office Saving Schemes: Types & Comparison

Are you looking for a risk-free investment option, which is ideal for tax saving too? Then, Post Office Savings Scheme is a one-stop solution for you. Post-office savings schemes are specifically designed for rural and urban investors who are looking for a secured investment avenue and want to gain the benefit of guaranteed return.

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Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

The Post-office savings schemes are offered by the Department of Post under the Ministry of Communication of the Government of India. As a government-backed savings schemes, these are very easy to enroll and require limited documentation. Moreover, these schemes carry minimum risk as compared to the other investment options.

To help you now more about Post-Office Savings Scheme, further in this article we have discussed in detail the schemes available with the postal department.

Types of Post-Office Savings Scheme

Post-office savings account
National Savings Recurring Deposit Account
National Savings Monthly Income Account
National Savings Time Deposit Account
National Savings Certificates (VIII Issue) Account
Public Provident Fund Account
Sukanya Samriddhi Account
Kisan Vikas Patra Account

1. Post Office Savings Account

The post office savings account offers a yearly interest rate of 4% on the individual or joint accounts. The investors can open the account with a minimum cash payment of Rs.500. The account can be opened by a single adult, for the joint account (maximum 2 adults), minor above 10 years age, guardians on behalf of the minor, or a person of unsound mind. As a tax saving option of investment, the interest earned on the contribution made towards POSA is tax-free up to Rs.10,000 each year. The scheme also offers the facility to choose the nominee while opening the account or after opening the account. The interest rate of post-office savings scheme is fixed through the year and is subject to change from time to time as declared by the government.

2.National Savings Recurring Deposit Account

National Savings Recurring Deposit scheme is specifically designed to help the small investors to accumulate capital in order to meet the short-term and long-term future financial needs. The NSRD post office account interest rate is 5.8% per annum which is compounded quarterly. The account can be open by any individual, maximum of 3 adults in case of the joint account, minor above 10 years of age, or a guardian of the person of unsound mind/ minor. A minimum contribution of Rs.100 per month is required to open the account.

The national savings recurring deposit account comes with a maturity tenure of 5 years from the date of opening the account and can be extended for a further 5 years. Moreover, the scheme also offers the facility to choose the nominee while opening the account. The National Savings Recurring Deposit Account allows premature closure after the completion of 3 years from the date of opening the account.

3. National Savings Monthly Income Account

This post office scheme is ideal for investors who want to have a regular flow of income after retirement or for those who want to gain a steady flow of regular income. The interest rate applicable to the National Savings Monthly Income account is 6.6% per annum payable monthly. The individual can invest in the multiple of INR.1000/- and can make a maximum investment up to a limit of Rs. 4.5 lakh in a single account and Rs.9 lakh in a joint account. The account can be opened by a single adult, for the joint account (maximum 3 adults), guardian o behalf of minor or person of unsound mind and minor above 10 years of age.

The applicable rate of interest is notified quarterly by the government from time to time and is payable monthly. The scheme offers the facility to choose the nominee at the time of opening the account. The maximum maturity period of the policy is 5 years and the account can be transferred from one post office to another. Moreover, subscribers can convert the single account into a joint account and vice versa.

4. National Savings Time Deposit Account

Backed by the government of India, the National Savings Time Deposit scheme offers four accounts with different maturity periods. The national savings time deposit scheme account comes with a maturity period of 1 year, 2 years, 3 years, and 5 years. Under this scheme, the interest is payable annually but computed quarterly. The minimum amount required to open the account is INR 1000/-.

The account can be opened by a single adult, for the joint account (maximum 3 adults), guardian o behalf of minor or person of unsound mind and minor above 10 years of age. Let’s take a look at the interest rate from 01.04.2020 to 30.06.2020

Period	Rate
1 year A/C	5.5%
2 year A/C	5.5%
3 year A/C	5.5%
5 year A/C	6.7%

In this post office savings scheme, the subscribers can choose the nominee at the time of opening the account or after opening the account. The subscribers also have the option to transfer the account from one post-office to another and can also convert the single account into a joint account and vice versa.

5. National Savings Certificate (VIII Issue) Account

Under this pension savings scheme, an individual can start investing with a minimum sum of Rs.1000/- there is no applicable cap on the maximum investment amount. The applicable interest rate on the National Savings Certificate account is 6.8% which is compounded annually but payable at maturity. As a safe and lucrative option of investment, the scheme also offers an opportunity to save on tax. The deposits made under the scheme are applicable for tax exemption under section 80C of the IT Act.

National Savings Certificates can be purchased by,

An individual adult
For joint account (A) ( Maximum 3 individuals)
For joint account (B) ( Maximum 3 individuals)
Minor above the age of 10 years
Guardian on behalf of a minor or on behalf of a person of unsound mind.

In the case of NSC VIII, the transfer of certificates from one account holder to another can be done only once from the date of issuance to the date of scheme maturity.

6. Public Provident Fund Account

Backed by the government of India, this is one of the most popular tax saving investment options available in India. PPF is specifically designed for individuals who are looking for a safe investment option and who wants to create a financial cushion in the long-term so that they can have a financially secured life after retirement. The individual can open the PPF account with a minimum investment of Rs.500 and can invest up to a maximum Rs.1.5 lakh in a financial year. The public provident fund comes with a maturity period of 5 years, which can be further extended for 5 years within 1 year of maturity.

The interest rate applicable to the PPF scheme is 7.1% per annum which is compounded annually. The interest rate applicable to the PPF account is regulated by the central government every quarter. Besides this, the contribution made towards PPF accounts up to the maximum limit of Rs. 1.5 lakh is eligible for tax exemption under Section 80C of Income Tax Act. Moreover, the interest earned on the PPF investment is also exempted from tax.

Even though PPF comes with a lock-in period of 15 years, partial withdrawals can be made in case of emergencies. However, the withdrawal can be made after completion of 5 years of activation of the account.

7. Sukanya Samriddhi Yojana Account

As a part of the ‘Beti Bachao, Beti Padao” campaign, Sukanya Samriddhi Yojana is a government-backed savings scheme, which is specifically designed to secure the financial future of the girl child. Sukanya Samriddhi Yojana account can be open by the parent of the girl child below the age of 10 years. SSY has a tenure of 21 years or until the girl child is married after the age of 18 years.

As one of the lucrative options of investment of the post-office savings scheme, the scheme offers an interest rate of 7.6% per annum ( applicable from 01-04-2020). The interest rate calculated on a yearly basis and is compounded annually. The parent of the girl child can open the account with a minimum investment of Rs.250/- and can invest up to a maximum Rs.1.5 lakh in a financial year. Deposition can be made into the account till the completion of 15 years of the period from the date of opening the account. As a tax saving investment option Sukanya Samriddhi Yojana offers the benefit of tax exemption on the investment made towards the account up to the maximum limit of Rs.1.5 lakh U/S 80C of the IT Act.

8. Kisan Vikas Patra Account

This is a post-office savings scheme option, which is available in the form of certificates. As a fixed rate small savings scheme option, it is specifically designed to double the one-time investment in a period of approximately 10 years & 4 months. Kisan vikas patra scheme was introduced by the India Post-Office with an objective to initiate long-term financial discipline in people. You can open the account with a minimum investment of Rs.1000, there is no cap applicable to the maximum investment.

Kisan Vikas Patra Certificates can be purchased by,

An adult individual
Joint account A (maximum 3 adults)
Joint account B (Maximum 3 adults)
Minor above the age of 10 years.
Guardian on behalf of the minor or on behalf of a person of unsound mind.

The KVP certificates can be transferred to one person to another or from one post office to another. Moreover, KVP also offers the facility to choose the nominee at the time of opening the account or after opening the account.

Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer. Tax benefit is subject to changes in tax laws. *Standard T&C Apply

Benefits of Post Office Savings Scheme

The following are some of the benefits offered by Post-Office Savings Scheme.

1. Reliable and Risk-Free

As one of the safest option of investment, post-office schemes are government backed schemes, which offers reliability and are low risk investment options.

2. Attractive Return Generation

The interest rate of Post Office Savings Scheme is updated by the Ministry of Finance quarterly. Currently, the next interest review in due in Feb 2021. However, the interest rate of these schemes ranges between 4%-9%. Thus, this scheme offers profitable return to the investors.

3. Tax Benefits

This is another major benefit offered by Post Office Savings Scheme. Some of the scheme like National Savings Certificate offers tax exemption Under Section 80C of the Income Tax Act on the deposition amount. Also, the benefit of tax exemption is applicable on interest earned on KisanVikasPatra scheme.

4. Simple Process of Investment

Post office provides the investors with easy enrolment process to any of the savings scheme. Post office saving scheme offers simple application process and minimal documentation to subscribe for the scheme.

5. Long-term Investment

Most of the Post Office Savings Scheme comes with a long-term investment option of 15 years. Investing for the long-term like in PPF helps the investors to accumulate fund for the future and fulfil their long-term financial objectives of life.

6. Offers Different Types of Product

There are different types of product offered under Post-office Savings Scheme. As per one’s own financial objective and investment needs the investors can choose to invest in these schemes.

Comparison of Interest Rate and Taxability of Different Post Office Savings Schemes

Post Office Savings Schemes	Applicable Rate of Interest		Tax Deduction on Investment	Interest Taxable
Post Office Savings Account	4.0%		NO	Yes
National Savings Recurring Deposit Account	5.8%		No	Yes
National Savings Monthly Income Account	6.6%		No	Yes
National Savings Time Deposit Account	1 year A/C-	5.5%	No	Yes
	2 year A/C-	5.5%	No	Yes
	3 year A/C-	5.5%	No	Yes
	5 year A/C-	6.7%	No	Yes
National Savings Certificate (VIII Issue) Account	6.8%		Yes	No
Public Provident Fund Account	7.1%		Yes	Yes
Sukanya Samriddhi Yojana Account	7.6%		Yes	Yes
Kisan Vikas Patra Account	6.9%		No	Yes

Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer. Tax benefit is subject to changes in tax laws. *Standard T&C Apply

How to Apply for Post Office Savings Scheme?

By following these simple steps, you can apply for Post Office Savings Scheme.

Step1- Visit to the nearest post-office branch.
Step2-Get the relevant account opening form from the post-office for the chosen scheme. However, you can also download the form online from the official website of the Indian Post-office.
Step3- Fill up the form with all the required details and submit it along with the KYC proof and photograph. You will need to provide other documents as required by the POSS.
Step4- Complete the process of enrolment by depositing the amount of the scheme you have chosen.

Wrapping it UP!

These are the savings scheme options offered by Post-Office. These schemes are a remunerative option of investment as it not only offers safety but also provides the benefit of guaranteed return. However, as with all investment plans, you will need to do your homework, before you start investing your hard-earned money. Invest your money wisely is all that we can advise!

FAQ's

Q: How do I invest in the post office monthly income scheme?

Ans: The investment in Post Office Monthly Income Scheme can be done easily and needs minimal documentation. The investors will need to submit the copy of address proof, identity proof, and passport photograph. Along with the address proof, the investors will also need to submit the ID proof.
Q: Can I check my post office account online?

Ans: Yes, you can check the post-office account online by visiting the official website of Indian Post-office.
Q: What is the minimum balance required for an account?

Ans: The post office savings account requires a minimum balance of Rs.20.
Q: Do the post office schemes provide tax benefits?

Ans: Yes, tax benefits can be availed on the investment made in post-office scheme U/S 80C of the Income Tax Act.
Q: Can I withdraw money from any branch of the post office?

Ans: Yes, the withdrawal process from post-office is similar as withdrawals via banks in all the branches across India.

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

Past 10 Years' annualised returns as on 01-12-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%

¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.

**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).