The #Department of Post is a postal system in India, operating under the Government as a subsidiary of #Ministry of Communications. It also has the distinction of being the most widely distributed postal system in the world. Apart from delivering posts and remitting money orders, it also gives several savings schemes for investors. In recent pasts, some of the post office savings schemes like – #Post office savings account; #National savings monthly income account; #national savings certificate (VIII Issue) account; #kisan Vikas Patra account, etc have gained popularity. In this article, we will go through several parameters like eligibility, minimum amount, return, etc of these schemes as well as other savings schemes also.

Types of Post Office Savings Schemes

Currently, there are nine different savings schemes offered by the postal department of India. Below provided are the salient features of each of these schemes along with a brief description of other facilities provided with them.

1) Post Office Savings Account

The below table provides some key information about the post office savings account scheme.

The Post Office Savings Account can be opened by a single adult or by a maximum of two adults as a joint account. As specified in the table above, this account can also be opened by a minor above 10 years of age; however, in case if the person is of an unsound mind, then the account must be held jointly by a guardian as well. Also, after attaining a major age, the minor has to convert the account in his/her name.

The account can be opened by Rs 500 which is also the minimum balance to be maintained, failing which an annual penalty of Rs 100 will be liable to be deducted on the last working day of each financial year. If for any reason the account becomes nil, then the account will be automatically closed.

Tax Rebate under the Scheme

Interest earned is tax-free up to Rs 10, 000 for each financial year.

2) National Savings Recurring Deposit Account

The below table provides some key information about the national savings recurring deposit account scheme.

In the case of joint accounts, a maximum of three individuals is allowed per account. After the account has been operational for three years, a premature closure can be requested.

If the account is opened up to the 15^th of any month, then the deposit must be made up to the 15^th of next month and from 15^th to the last working day of next month if the account is open from 15^th to last working day of a month.

Also, if the deposits are not made within the designated dates then a default fee of Rs 1 for every Rs 100 will be charged. After four continuous defaults, the account gets discontinued and becomes non-operational if not revived within the grace period of 2 months.

If you pay at least 6 installments in the account then you will be liable for a rebate of Rs 10 for 6 months and Rs 40 for 12 months for every denomination of Rs 100.

3) National Savings Time Deposit Account

The interest under this scheme is payable annually but it is calculated quarterly. The rate of interest increases with the maturity period of the scheme, that is, for a 1-year account the applicable rate of interest for the period 1/4/2020 to 30/06/2020 is 5.5%; similarly for  2 and 3 years A/c, the rate for the same period is also 5.5%, while for a 5-year account it is 6.7%.

Some other salient features of the account are provided in the table below –

A joint account can be held only by a maximum of 3 individuals. The account can be opened both by depositing cash or cheque; however, it must be remembered that the date of clearance of cheque would be the date of the account opening.

The facility of converting single accounts into joint accounts and reverse is also available.

Tax Rebate under the Scheme

All the Time Deposit (TD) schemes with an investment period of up to 5 years are liable to the Income Tax benefit under section 80 C as per the Income Tax Act, 1961.

4) National Savings Monthly Income Account

The below table provides some key information about the post office national savings monthly income account scheme.

The maturity period of the National Savings Monthly Income Account is 5 years as applicable from 1^st December’11.

There is also a facility to convert a single account into a joint account and vice versa. Interest is credited monthly basis into the savings account. There is a facility of encashment after 1 year but a deduction of 2% on the deposit shall be made if the encashment is done between 1-3 years and 1% if it is done after 3 years.

A bonus of 5% shall be applicable to all the MIS accounts opened between Dec 8 2007 and Nov 30, 2011.

5) Senior Citizen Savings Scheme (SCSS)

The below table provides some key information about the post office senior citizen savings account scheme.

Persons claiming age relaxation i.e. between 55 to 60 years shall do so within one month of receiving retirement benefits and also the amount in their SCSS account shall not exceed from their retirement benefits.

Also, retired defense personnel equal to or above 50 years of age, could also avail of the scheme benefits provided they fulfill certain requirements.

The joint accounts can only be opened with a spouse (husband/wife), any other combination isn’t allowed under this scheme and also the first depositor in case of a joint account is the investor.

Premature closure is allowed with certain rules and regulations. If the closure is sought within one year then no interest will be payable. In case the interest has been paid, the same will be recovered. If the closure is sought after one year then a deduction of 1.5% shall be made on the deposit, the same will be applicable at 2% for closure above 2 years.

The maturity period of the SCSS scheme is 5 years. There is also an option to extend the account for further 3 years beyond the maturity period. If the account is closed within this extended period then no deductions shall be made.

Tax Rebate under SCSS

Liable for TDS deduction if the interest amounts to more than Rs 50, 000.

6) Public Provident Fund Account (PPF)

The below table provides some key information about the post office public provident fund account scheme.

If the depositor fails to deposit the minimum amount in the following years, the account will be discontinued; however, it can be revived within the maturity period by paying a fee of Rs 50 along with arrears.

The maturity period for PPF accounts is 15 years and can be extended for another 5 years within 1 year of maturity.

Premature closure of the account is allowed after 5 years counting from the end of the first year of account opening, at a deduction of 1% on the interest from the date of account opening.

Tax Rebate under PPF

The interest is completely tax-free, though; the deposits are liable to deductions as per Section 80C of the Income Tax Act.

7) National Savings Certificate (NSC)

The table below gives salient features of the national savings certificate scheme by the post office.

The National Savings Certificate can be purchased by a single individual or a maximum of two accounts (Joint accounts A and B), held by a maximum of 3 adults.

Effecting from 1^st July 2016, NSCs are issued in the shape of a passbook. Transfer of NSC from one person to another is designated by the seal and sign of an authorized postal official.

Tax Rebate under NSC

The deposits in the account qualify for a tax rebate as per section 80C of the Income Tax Act.

8) Kisan Vikas Patra Account (KVP)

The below table provides some key information about the Kisan Vikas Patra account scheme.

A certificate can be purchased by a single individual or three adults as a joint account. Like the NSC, the KVP is also issued in the shape of a passbook, effectively from 1^st July 2016.

The facility of transfer of the certificate from one post office to another as well as from one person to another is also available. The facility of encashment of the certificate after a period of 30 months is also available.

Tax Benefit under KVP

There is no tax applied on the interest earned; however, no tax benefit is provided on the investment and they are liable for deduction under section 80C of the IT Act.

9) Sukanya Samriddhi Account Scheme

The Sukanya Samriddhi Scheme is specifically designed for the benefit of the girl child. The scheme has received tremendous response 1.75 crore active accounts amounting to total deposits of Rs 55,573.54 Crore.

The table below gives the salient features of the Sukanya Samridhi Account Scheme-

The account can be open by a parent/guardian in name of a girl child. In the case of more than one girl child, separate accounts can be opened for each one of them.

If the annual deposit of Rs 250 defaults in a financial year then the account will be discontinued; however, the same can be revived on payment of penalty of Rs 50/ year along with the minimum payable amount.

Deposits are allowed up to 15 years from the date of opening of the account. Withdrawal of 50% amount is permissible when the account holder attains the age of 18 years.

Normally the account can be closed after the completion of 21 years; however, a premature closure after 18 years of age can be availed in case of marriage. Such closure should be sought a month before marriage or within three months after the marriage.

Advantages of Post Office Schemes

The above-mentioned post office tax saving schemes are better than other market schemes in many ways. Some of the prime advantages of these schemes are provided below –

• The availability of a post office in the remotest corner of the country makes it extremely convenient for investors to invest in the schemes.
• The schemes are free from any type of market fluctuations, what so ever, and provide assured returns.
• With interest rates ranging from 4% to 9%, they are preferred over mutual funds and bank FDs that are subjected to market fluctuations.
• The easy and simple process for enrollment into these schemes makes them a hit.
• Some of the schemes even allow a minimum deposit of as low as Rs 20, which is far less than the investment made in other nonpost office schemes.

Conclusion

The biggest advantage of these schemes is their definite guarantee and the backing of the central government that they have. Also, the interest rates are revised every quarter by the government in the best interest of the investor, irrespective of the market condition.