Post Office Saving Scheme

When looking for post office savings schemes in India, you have various choices. Below is a list of some of these savings plans:

Latest Post Office Interest Rates 2024

Savings Scheme	Rate	Tax Deduction on principal	Interest Taxable
Post Office Savings Account	4.0%	No	Yes
Post Office Recurring Deposit	6.5%	No	Yes
Post Office Monthly Income Scheme	7.4%	No	Yes
Post Office Time Deposit (1 year)	6.9%	No	Yes
Post Office Time Deposit (2 year)	7%	No	Yes
Post Office Time Deposit (3 year)	7%	No	Yes
Post Office Time Deposit (5 year)	7.5%	Yes	Yes
Kisan Vikas Patra (KVP)	7.5%	No	Yes
Public Provident Fund (PPF)	7.1%	Yes	No
Sukanya Samriddhi Yojana	8%	Yes	No
National Savings Certificate	7.7%	Yes	No
ELSS (Equity Linked Savings Scheme)	Market Linked	Yes	Yes
NPS (National Pension Scheme)	Market Linked	Yes	Yes
Tax Saving FDs	6.75%*	Yes	Yes
Senior Citizens’ Saving Scheme (SCSS)	8.2%	Yes	Yes

 Types of Post Office Saving Schemes

Post Office Savings Account: 

 The post office savings account functions as a conventional savings account but provides a slightly more favorable interest rate. It not only assures safety but also offers the convenience of making partial or complete withdrawals with short notice, proving valuable during financial emergencies. 

• Interest rate: 4%
• Tenure: No fixed tenure
• Minimum Investment: The minimum investment amount required to open a Post Office Savings Account varies depending on the type of account. For a regular savings account, the minimum initial deposit was typically Rs. 500, and subsequent deposits could be made in multiples of Rs. 10.
• Maximum Investment: None
• Deduction on Principal: No 
• Tax on interest: The interest earned on a Post Office Savings Account is taxable as per the individual’s applicable income tax slab rates. 

 Post Office Recurring Deposit:

One of the most favored options among various post office saving schemes is the post office recurring deposit (post office RD). This scheme is particularly well-suited for individuals with modest investable funds, as it can be initiated with just Rs 10 per month and subsequent deposits in increments of Rs 5. 

The scheme imposes no upper limit on the invested amount. This scheme offers an annual interest rate of 6.50%. Moreover, it provides considerable flexibility—depositors can make partial withdrawals of up to 50% of the total balance after a year. Additionally, you have the option to extend the investment tenure by another 5 years upon its conclusion. 

The RD is also transferable between different post offices, supports joint account openings, and even permits the convenience of opening multiple accounts.

•  Interest rate: 6.50%
• Tenure: 5 years
• Minimum Investment: The minimum monthly deposit required to open a Post Office RD account varies and is typically in multiples of Rs. 10. The minimum deposit amount depends on the specific terms and conditions set by the Post Office at the time of account opening. 
• Maximum Investment: None
• Deduction on Principal: No 
• Tax on interest: Yes, interest is taxable.

Post Office Time Deposit: 

This is similar to a bank fixed deposit (FD). A Post Office Time Deposit Account (POTD) requires a minimum deposit of Rs 200 and has no maximum limit. The interest rates are as follows:

• Interest rate: 6.90% – 7.50%
• Tenure: 1, 2, 3, and 5 years
• Minimum Investment: Rs 200
•  Maximum Investment: None
• Deduction on Principal: No (except tax-saver deposit with post office)
• Tax on interest: Yes

Kisan Vikas Patra (KVP): 

The Kisan Vikas Patra certificate system is provided by Indian post offices. The current rate of interest for the Q2 FY 2023-24 is 7.5% p.a., compounded annually. The minimum contribution required for the plan is Rs.1000, with no upper limit. The amount invested in the plan doubles over 112 months. 

Individuals can add nominees to the system, and the certificate can be moved from one person to another and from one post office to another. Individuals may also encash the certificate after 30 months from the day it was issued.

• Interest: 7.5%
• Tenure: 124 months ( 10 years and 4 months)
• Minimum Investment: Rs. 1000
• Maximum Investment: None
• Tax Deduction on Principal: There is no tax deduction available on the principal amount invested in KVP. 
• Tax on Interest: Interest earned from KVP is subject to taxation.

Public Provident Fund (PPF): 

The Public Provident Fund (PPF) plan is one of the country’s most popular and secure investing alternatives. Donations to the plan, as well as the interest earned by the contributions, are tax-deductible under Section 80C of the Income Tax Act. The plan may be created at post offices and banks, and it lasts for 15 years. 

 Individuals may extend the scheme’s tenure by an additional 5 years. As of August 2023, the Ministry of Finance has maintained the existing interest rate of 7.10% per annum for PPF accounts for the current quarter. Individuals must make a bare payment of Rs.500 and a max contribution of Rs.1.5 lakh to the plan each year.

• Interest: 7.10%
• Tenure: 15 years
• Minimum Investment: The minimum investment amount required to open and maintain a PPF account is Rs. 500 per financial year. 
• Maximum Investment: The maximum investment limit for a PPF account is Rs. 1.5 lakh per financial year.
• Tax Deduction on Principal: There is tax deduction available on the principal amount invested in PPF. 
• Tax on Interest: Interest earned on PPF is not subject to taxation.

Sukanya Samriddhi Yojana Account (SSY):

 Sukanya Samriddhi Yojana (SSY) is an endeavor designed to ensure a secure future for girls. The interest rate for the fiscal year 2023-2024 has now been set at 8%. Creating an SSY account is possible through either post offices or banks. Within a given year, contributions to the plan can range from a minimum of Rs. 1000 to a maximum of Rs. 1.5 lakh. 

A commitment of 14 years of contributions is required from the account holder, and the scheme reaches maturity after a period of 21 years. A noteworthy feature is the ability to transfer SSY accounts from one bank to another, adding a level of flexibility to the scheme.

• Interest: 8%
• Tenure:  The tenure of the Sukanya Samriddhi Yojana account is typically 21 years from the date of opening the account. This means that the account matures after 21 years.
• Minimum Investment: Rs. 1000
• Maximum Investment: Rs. 1.5 lacs
• Tax Deduction on Principal: There is no tax deduction available on the principal amount invested in SSY. 
• Tax on Interest: Interest earned on SSY is not subject to taxation.

National Savings Certificate (NSC): 

The NSC plan is one of the most well-known in India. Because the plan is supported by the Indian government, it offers guaranteed returns and tax breaks. Individuals can engage in the plan at post offices for five years. The scheme’s interest rates are set by the Indian government quarterly. 

 The scheme’s interest rate for 2023 is 7.70% per annum. The interest earned is aggregated yearly. The minimum contribution required for the plan is Rs.100, and there is no restriction on the amount that can be contributed. Individuals are entitled to tax advantages on their contributions to the plan under Section 80C of the Income Tax Act. Individuals may also transfer the certificate to the name of another individual. It, however, can only be done once.

• Interest: 7.70%
• Tenure: 5 years
• Minimum Investment: Rs. 1000
• Maximum Investment: No upper limit on the maximum investment amount.
• Tax Deduction on Principal: There is no tax deduction available on the principal amount invested in NSC. 
• Tax on Interest: Interest earned on National Savings Certificates (NSC) is subject to taxation.

Senior Citizens Savings Scheme: 

The Senior Citizens Savings Scheme (SCSS) was introduced to provide support for individuals aged 60 and above. Moreover, those falling within the age range of 55 to 60 who have opted for the Voluntary Retirement Scheme (VRS) can also avail themselves of the benefits offered by the SCSS. 

This scheme operates with a duration of 5 years and boasts an interest rate of 8.2% p.a. for the fiscal year 2023-24. To become a participant, individuals need to make a minimum deposit of Rs. 1000, while the upper investment limit is set at Rs 15 lacs. Participants also have the flexibility to transfer their SCSS accounts between post offices and banks. Notably, contributions made to this scheme are eligible for tax deductions under Section 80C of the Income Tax Act.

• Interest: 8.2%
• Tenure: 5 years
• Minimum Investment: Rs. 1000
• Maximum Investment: Rs. 15 lacs
• Deduction on Principal: No, there is no principal deduction.
• Tax on Interest: Yes, interest is taxable.

Pradhan Mantri Jan Dhan Yojana: The PMJDY Account holders are entitled to a life cover of INR 30,000 and accidental insurance coverage of Rs. 1 lakh in case of unforeseen events. An overdraft facility of up to Rs. 5000 is extended to account holders, applicable to a single account per individual. 

Applicants enjoy seamless access to pension and insurance policies. Account holders can earn interest on their deposited funds. Scheme beneficiaries are eligible for direct benefit transfers. It offers an interest rate of 4%.

• Interest: 4%
• Tenure: No fixed tenure 
• Minimum Investment: None
• Maximum Investment: None. 
• Deduction on Principal: No, there is no principal deduction.
• Tax: The interest earned under PMJDY was eligible for exemption from income tax under Section 80TTA of the Income Tax Act, up to a certain limit. The applicable limit for this exemption was ₹10,000 per financial year for individual taxpayers.

Voluntary Provident Fund (VPF): 

Workers have the option to willingly enroll in the Voluntary Provident Fund (VPF) scheme. Unlike the EPF system, where only 12 percent of the basic salary is permitted for contribution, employees have the opportunity to channel their entire basic income into the VPF plan. Contributions to the VPF program accrue interest at a rate of 8.15% per annum.

 This provision offers employees the chance to further enhance their savings with an attractive interest rate.

• Interest: 8.15%
• Tenure: 15 years 
• Minimum Investment: None
• Maximum Investment: None. 
• Deduction on Principal: No, there is no principal deduction.
• Tax: Interest earned on an employee’s contributions to VPF remains tax-free for amounts up to ₹2.5 lakh annually. For government employees, this threshold extends to ₹5 lakh. However, any interest accrued on employee contributions (including VPF) exceeding ₹2.5 lakh will be subject to taxation as income from other sources.

Post Office Monthly Income Scheme (POMIS): 

While resident individuals are eligible to invest in this scheme, it’s also accessible to minors. In fact, minors aged 10 and above are allowed to manage their accounts. While depositors can open multiple accounts within this monthly saving scheme, the cumulative amount across all accounts shouldn’t surpass Rs 4.5 lakh. 

The scheme offers an interest rate of 7.4% and the advantage of liquidity, allowing investors to withdraw the deposited amount starting one year from the initial deposit. However, it’s important to note that withdrawals made between 1 and 3 years incur a penalty of 1%, and withdrawals made after 3 years also carry a 1% penalty. The monthly interest received is considered part of the taxable income. Nonetheless, both the monthly interest and the deposit amount are exempt from TDS.

• Interest: 7.4%
• Tenure: 5 years 
• Minimum Investment: Rs 1500
• Maximum Investment: Rs. 3 lacs for minors, Rs. 9 lacs for single individual accounts, and Rs. 15 lacs for joint accounts. 
• Deduction on Principal: No, there is no principal deduction.
• Tax: Interest is taxed.

The Benefits of Post Office Savings Schemes Investments

• Minimal paperwork and simple procedures make Post Office investment plans simple to invest in and enroll in. These savings plans are available at Post Offices around the country and are suited for both urban and rural investors.

•  Post Office Savings Scheme interest rates are now comparable with bank interest rates, ranging from 4% to 7.6%. Furthermore, because these investments are supported by the government, the risk associated is limited.

•  Tax Exemption: The majority of these Post Office Savings Schemes are qualified for Section 80C tax refunds on the deposit amount. Some programs, such as the SSS (Sukanya Samriddhi Yojana), PPF, and others, provide tax exemption on the interest earned.

• The majority of these Post Office Savings Schemes are eligible for Section 80C tax refunds on the deposit amount. Some programs, such as the SSS (Sukanya Samriddhi Yojana), PPF, and others, provide tax exemption on the interest earned.

• These various Post Office Savings Schemes are designed to meet the differing investment needs of different investors. The deposit limitations, tax consequences, and return on investment of the various investment plans vary and can be chosen based on the investors’ specific needs.

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Post Office Investments – PPF, NSC, FD, RD, MIS, KVP, SSY FAQs

How do I invest in the post office’s monthly income scheme?

The Post Office Monthly Income Scheme is a low-risk, steady-income strategy. Individuals can invest up to Rs.4.5 lakh per month and joint accounts can invest up to Rs.9 lakh per month and get 6.7% interest each year. Every individual must have an MIS account to invest in a post office plan.

Is Post Office investment safe and tax-free?

It is safe since Post Office investments get backed by the Government of India’s sovereign guarantee. All of these programs are tax-free up to a specific extent, and some, such as PPF and Sukanya Samridhi Yojna, also provide tax benefits on returns.