Post Office Schemes – Concept, Application, Benefits, Compatibility, Types & more
Last Updated Date: Nov 17, 2022Know everything about Post office Schemes here. Find details like its Concept, Application process, Benefits, Types of Schemes & more.
Lets get started & learn how to invest in this scheme.
About Post Office Schemes
Ideally, the Post Office Schemes include a plethora of saving schemes that not only offer higher interest rates but also offer tax benefits.
Above all, these schemes back the guarantee of the Indian government. The India Post mainly manages all these schemes and offers various avenues for investors.
The aim of these saving schemes is to inculcate saving habits among Indians and provides multiple investment avenues.
Almost all post offices in the country offer these schemes to allow people from all over the country to access it.
The best part about investing in these schemes is the investors can get an exemption up to Rs.1.5 lakhs under section 80 C of the income tax act.
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How can you Apply for Post Office Schemes?
Here is a step by step process underlined –
- Firstly, you need to visit the post office branch of your choice.
- You can then get the open accounting form as per your scheme from the post office in your locality. Additionally, you can also choose to download these forms from the official portal.
- You need to fill-up the form and then submit along with your KYC, photographs, and proofs. The documents vary with the scheme, so you need to give details as per your scheme.
- Lastly, you can complete the process by depositing the minimum amount as per your scheme.
Check out all Govt. Savings Scheme available for Investment
Benefits of investing in Post Office Schemes
Here are the various benefits of Post Office Schemes –
Easy investment portal – The savings schemes are easy to invest in for both rural and urban people.
The schemes are ideal for investors who want to hedge risk and earn a decent amount of return. These schemes are quite popular because of their simplicity and availability.
Easy Documentation – The schemes are easy to invest in mainly because the documentation is simple. Above all, they are as safe as the Indian government locks them.
Tax Exemption – Almost all of the post office savings schemes are eligible for tax exemption under Section 80 C of the Income-tax act.
Additionally, under some schemes, the interest earned is also suitable for tax exemption.
Interest Rates – The interest rates under these schemes range from 4% to 9%. Investment avenues are risk-free. It is because all the schemes are under the control of the Government of India.
Variety of Products – There is a plethora of products available under post office schemes to meet the requirement of different individuals.
Some of the options available include savings deposits, recurring deposits, fixed deposits, monthly schemes, saving certificates, etc.
Who should invest in Post Office Scheme?
The post office savings scheme is mainly ideal for investors who don’t wish to take any risks. The investment avenues offer a fixed amount of returns.
Additionally, the minimum investment amount is quite reasonable, so investors from all economic classes can invest in these schemes.
Above all, these schemes are not susceptible to market fluctuations. They don’t carry the risk on the principal amount invested.
Learn everything about Retirement Planning here
Types of Post Office Schemes
This particular section of the article will showcase the most popular and common scheme offered by post offices.
You can go through the basics and shortlist some schemes you wish to invest in. Further study and comparison will lead you the right way, i.e. the right scheme for you.
- Post Office savings account
- Post office monthly income scheme
- 5-Year Post Office Recurring Deposit Account (RD)
- Post office Time deposit
- Senior Citizen Savings Scheme (SSS)
- Public Provident Fund
- National Savings certificate
- Sukanaya Samriddhi Scheme
- Kisan Vikas Patra
Post Office Savings Account
This account is more or less similar to a savings account with a bank. The only difference is that this account is held with the post office.
You can open only one account with one post office. You can also open an account for a minor. The interest rate is 4% and is entirely taxable, but no TDS is cut.
The minimum balance required is Rs.50 under the non – cheque facility. On the total of your savings account, a total deduction of Rs.10,000 is available.
It also includes post office savings interest under Section 80TTA of the Income Tax Act, 1961.
Post Office Monthly Income Scheme
Under this scheme, an investor can avail a fixed sum of return on the lump sum investment. You can open this account if you are a resident individual.
It can either be single or joint. A minor above ten years can operate the account. Rs.1500 is the minimum investment requirement, and Rs.4.5 lakhs is the maximum investment limit per account.
The maximum investment limit under the joint statement is Rs.9 lakhs.
Under this scheme, an investor can earn at least 7.6% interest per annum. The scheme is mainly disbursed monthly.
Ministry of Finance validates it. The minimum lock in period for this scheme is five years. This Post Office Schemes is ideal for millennials.
Post Office Time Deposit
Under this scheme, the tenure varies from account to account. Rs.200 is the minimum amount deposit, and there is no maximum limit as well. You can either open the account single-handedly or jointly.
Additionally, you can also open the account in the name of a minor. Across India, you can transfer from one post office branch to India.
The account is automatically renewed once the account matures. If the tenure is five years, then investors can avail of tax benefits.
5-Year Post Office Recurring Deposit Account (RD)
It is ideally a monthly investment scheme having a fixed tenure of 5 years. The interest rate the investors can earn under this scheme annually is 5.8%.
The 5-Year Post Office Recurring Deposit Account (RD) is ideal for small investors as they can invest at a minimum of Rs.10 per month. Investors can invest in any multiples of Rs.5.
Above all, there is no maximum limit for investment. Even investors can open joint accounts. Besides, these investors can open accounts for minors also.
You can transfer RD from one account to another. If you fail to deposit the investment every month, then the default fee is five paise for every 5 rupees.
The scheme is quite flexible as it allows investors to make a partial withdrawal of up to 50%.
Ideally, there is no TDS under this scheme. In the hands of the investor, the income is taxable. It is one of the best schemes for investors who are not willing to take any risk.
Senior Citizen Savings Scheme (SSS)
Sixty years is the minimum age for this scheme. Investors who have taken voluntary retirement can also invest in the scheme.
Rs.15 lakhs is the maximum investment available for investment. Investors can invest in multiples of Rs.1000. Also, individuals can invest in joint accounts.
The tenure under this scheme is five years, and the interest rate is 7.4%. The scheme is quite flexible as it allows premature withdrawals of deposits with a penalty of 1.5% after a year.
After the scheme matures, investors can extend the account by three years. The scheme is eligible for deduction under the Income-tax act.
This Post Office Scheme is ideal for Retirement benefits.
Public Provident Fund
If you are looking for a long-term investment option, then a public provident fund is your best bet. It has a tenure of 15 years. It offers an interest rate of 7.71% per year.
An investor can invest a maximum of Rs.1.5 lakh per year. The scheme is eligible under section 80C of the income tax act.
There is no age barrier to the scheme. Rs.500 is the minimum investment account. Investors can only open the account in a single-handedly way.
After completing the maturity period of 15 years, the investors can extend the account by five years.
From the 3rd year of opening the account, investors can avail of a loan till the 6th year of account opening.
National Savings Certificate
The maturity period under this scheme is five years. Investors can earn an interest of 6.8% per annum. The scheme doesn’t have any maximum limit on investment.
The investors can choose any denominations of Rs.100, Rs.500, Rs.1,000, Rs.5,000 and Rs.10,000 to deposit under the scheme.
You can either purchase it in single holding or on behalf of the minor. Investors can pledge the certificates in banks to avail of a loan.
The investment under the national savings certificate is eligible under section 80C of the income tax act. Once during the tenure, investors can transfer certificates to another person.
Sukanaya Samriddhi Scheme
This scheme is mainly introduced for the girl child. Rs.1000 is the minimum investment amount, while Rs.150000 is the maximum investment amount.
For 15 years, investors have to invest the minimum amount. After that, the account will earn interest till maturity.
The scheme matures when the girl child attains maturity at the age of 18 years or after 21 years. If the girl child loses Indian citizenship, the account is closed.
At the time of account opening, the girl child’s age should be ten years or less. If you fail to pay the minimum amount, you have to pay Rs.50 as a penalty.
A girl child is eligible for partial withdrawal after she attains maturity. Under section 80C of the income tax act, investors can avail of tax benefits.
This Post Office scheme is quite popular in rural India as it offers security to the next generation of women.
Kisan Vikas Patra
Under this scheme, investors can earn an interest of 6.9% per year. You can purchase it from any post office.
After every 124 months, the invested amount doubles. Rs.1000 is the minimum investment, and there is no maximum investment limit as such.
Investors can easily transfer the certificates. You can avail of the encashment facility after 2.5 years of investment in the scheme.
There is no tax deduction available under the scheme. It is ideal for both small and new investors who belong to remote areas and don’t have other exposure to schemes.
You can make an investment in denominations of Rs.1,000, Rs.5,000, Rs.10,000 and Rs.50,000.
Conclusion – Post Office Schemes
Thus, you can avail these small savings schemes through post offices. These schemes are one of the safest avenues available for people across the country.
Furthermore, the investment schemes not only provide fixed returns but are also easy to manage. You can invest in the schemes mentioned in this guide if they meet your financial goals.
The best part is you don’t have to undertake any risk.
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