Indian post office offers various small saving deposit schemes to investors at an attractive rate of interest. These secured small saving deposit schemes from post office are offered to general public. You can approach any postal office nearer to your city or town to avail these small saving deposit schemes.
Post office national saving certificate scheme
National saving certificate or NSC can be purchased from post office. You can invest with a minimum investment of Rs.100. Investors can avail loan facility by keeping NSC as collateral security deposit.
Attractive features of post office’s NSC;
- Interest rate for NSC VIII (5 years) is 8.5% and for NSC IX (10 years) is 8.8%.
- No TDS on interest on NSC.
- Tax deduction is available under section 80C for investment up to Rs. 100000 per year.
- No maximum limit of investment is fixed.
Public provident fund scheme
PPF or public provident fund account can be opened in any authorized bank or in a approved branch of post office. To know more on PPF scheme read our article on public provident fund.
You can start investing in post office PPF account with a minimum amount of Rs. 500 per year and up to a maximum amount of Rs. 100000 per year. However, you cannot have more than 12 number of installment payments during a year i.e. investments for the entire year has to be deposited in 12 or less number of installments.
As a salary individual you can invest in post office PPF account in addition to depositing money in EPF account.
Attractive features of PPF;
- Interest rate on PPF investment is 8.7% per annum
- Initial tenure of investment is 15 years which can be further extended for 5 years. There is no limit on number of extension.
- Interest received from PPF account is completely tax free.
- Investment to post office PPF account is also eligible for tax deduction under section 80C of income tax act up to a maximum limit of Rs.100000.
- Withdrawal and loan facility can be availed on post office PPF account scheme.
- Free from court attachments
Post office time deposit option
Post office allows you to invest for a time period of 1 year, 2 year, 3 year and 5 year. Interest on these investments will be compounded quarterly but will be paid at the end of the year.
Interest at the rate of 8.2% per year is allowed for one year deposit and there after it increases by .1% for additional years;
|Period of investment
||Rate of interest per year (in percentage)
Attractive features of post office time deposit;
- Minimum amount to be deposited is 200 rupees and thereafter in multiple of Rs. 200.
- Loan can be availed by keeping the amount invested as collateral security.
- Interest on time deposit is taxable in the hand of investor
- Premature withdrawal can be availed.
Post office Monthly Income Scheme – MIS
Monthly income scheme or MIS is a small investment deposit scheme where anyone can invest monthly in multiple of Rs.1500 for a period of 5 years. It can also be operated jointly.
If you want, your MIS account can be closed prematurely after completion of one year. After one year and before 3 years it can be closed at the rate of 2% discount and there after the discount rate is 1%.
Here are some of the attractive features of post office’s MIS Scheme;
- Maturity period is 5 years
- No TDS on interest on MIS
- Maximum investment can be up to Rs. 4.5 lakhs for a single account and Rs. 9 lakhs for a joint account.
- Minor can also open post office MIS account through a guardian. Investment limit for a minor’s MIS account is Rs. 3 lakhs and this limit should not be clubbed with guardian’s account.
- Interest rate – 8.4% per year
- No tax deduction for investing in post office’s MIS scheme.
Post office Senior Citizen’s saving account
A senior citizen who is 60 years of age or above can invest in post office senior citizen investment scheme to get a higher interest rate of 9.2% per annum. Senior citizen can deposit minimum amount of Rs. 1000 and multiple of that thereafter. Maximum limit of investment is Rs. 1500000.
If someone has retired on a VRS scheme then the age limit can be reduced to 55 years. In case of defense personal there is no age bar.
Attractive features of Senior citizen saving account scheme;
- Maturity period is 5 years which can be extended for a further period of 3 years
- TDS will be deducted if interest amount per year exceed Rs.10000.
- Premature closure is allowed
- After 5 years from the date of opening the account you can withdraw the amount
- Investment up to Rs. 100000 is allowed as tax deduction under section 80C of income tax act.
You can also open a normal saving account with the post office to earn 4% interest per year. Minimum balance to be maintained is Rs. 50 and with cheque facility its Rs. 500. Maximum balance permissible for a single account is Rs. 100000.