Post Office Savings Scheme - Types, Benefits and How to Invest in 2022

Post office is probably the oldest organisation in India and was started in the British era in 1854. It started off as delivering posts only, but later on, widened its services by offering other banking services. Because they are backed by the government, investing in these schemes is considered relatively safe.

What is a post office savings scheme?

As the name suggests, the post office savings scheme includes saving instruments, offering several reliable and risk-free returns on investments. In India, you can open a savings account at a post office in several ways. These offer fixed or recurring deposit policies and attractive fixed interest rates. It is a beneficial scheme for the investors to securely earn a fixed interest on their deposit amount in periodic intervals.

It is similar to a bank or NBFC account, but it is considered to be safer since it is directly under the central government. Besides, the post office has a greater reach, with offices in distant and rural regions providing greater access even to the most marginalised sections of Indian society.

Types of post office savings schemes

There is a wide range of deposit and post office savings schemes for investors in India. A few of these include the post office savings account, Public Provident Fund, Kisan Vikas Patra, and Sukanya Samriddhi Account, to name a few.

The following discusses the various types of post office savings schemes that you can avail yourself of:

Post office savings scheme
Post Office Savings Account (SB)
The Post Office Savings Account (SB) is similar to any retail bank savings account. It offers an interest rate of 4 per cent and the minimum deposit amount is ₹500, and the minimum withdrawal amount is ₹50 only. Both adults and minors can open a savings bank account. There is also a tax exemption for up to ₹10,000, and there is no maximum investment limit.
Post office savings scheme
National Savings Recurring Deposit Account (RD)
The National Savings Recurring Deposit Account (RD) is one of the popular post office savings schemes that you can avail of. It has an interest rate of 5.8% per annum with a minimum monthly deposit of ₹100. There is no maximum limit for your investments, and the tenure for maturity is fixed at five years. You can also close this account prematurely by paying the amount for three years.
Post office savings scheme
National Savings Time Deposit Account (TD)
The National Savings Time Deposit Account (TD) is a tenure-based fixed deposit account that requires a minimum investment of ₹1000 with no maximum limits. This post office savings scheme offers you an attractive 6.7% interest for a tenure of five years. You can also create a TD account for one year, two, and three years with an interest rate of 5.5%.
Post office savings scheme
National Savings Monthly Income Account (MIS)
The National Savings Monthly Income Account (POMIS) is a post office savings scheme that pays an interest rate of 6.6%. The minimum investment limit is ₹1000. There is a maximum investment limit of ₹4.5 lakhs for individual accounts and ₹9 lakhs for joint accounts. For minors, the maximum investment limit is ₹3 lakhs. It is a go-to wealth management option for many Indians due to its centralised monitoring and safety.
Post office savings scheme
Senior Citizens Savings Scheme Account (SCSS)
Senior Citizens Savings Scheme Account (SCSS) is a post office savings scheme for any individual over the age of 60. However, retired civilian employees above 55 years of age and retired defence employees above the age of 50 can also create such an account. The minimum deposit required is ₹1000 rupees, and the maximum investment limit is set at ₹15 lakhs. The interest rate is also lucrative and pegged at 7.4%.
Post office savings scheme
Public Provident Fund Account (PPF)
The PPF account offers an attractive long-term investment option for Indian individual adults with a minimum deposit of ₹500. The maximum deposit is ₹1.5 lakhs per financial year. Persons of an unsound mind can also open such an account with the consent of a legal adult guardian. The interest rate for a PPF account is set at 7.1%.
Post office savings scheme
Sukanya Samriddhi Account (SSA)
The Sukanya Samriddhi Account(SSA) is a special government scheme to empower girl children in India. It has an interest rate of 7.6% and requires a minimum deposit of ₹250 and a maximum investment limit of ₹1.5 lakhs in one financial year. Each family can have two such SSA accounts. In the case of twins or triplets, the family can apply for more than two such accounts. There is no limit to the number of deposits that can be made.
Post office savings scheme
National Savings Certificates (VIIIth Issue) (NSC)
National Savings Certificates can be purchased at any post office for a minimum sum of ₹1000. There is no maximum limit, and it offers an attractive interest rate of 6.8% annually. It is a 5-year investment plan that can be opened by an individual or jointly. Even a minor above the age of 10 can receive an NSC in their name.
Post office savings scheme
Kisan Vikas Patra(KVP)
Kisan Vikas Patra is a new scheme launched by the Government of India under which any Indian adult can open a KVP individually or jointly with a minimum balance of ₹1000. The interest rate offered is at 6.9%. This account can also be prematurely closed with no loss of benefits after 2.5 years. There is no maximum limit to the investment amount or the number of KVP accounts as well.
Post office savings scheme
PM CARES for Children Scheme, 2021
If a child has lost both parents or the last surviving parent due to the COVID-19 pandemic, an account will be opened in the child’s name, and an upfront lumpsum payment will be made from the PM CARES fund. The deposit amount is ₹10 lakhs, and the beneficiary receives a monthly stipend of ₹4000 each month until the age of 18. After which, they can earn interests as per the monthly income account scheme on that ₹10 lakhs until the age of 23.

Interest rates in 2022

The following table denotes all the post office saving schemes and their respective interest rates:

Sr. No.

Post Office Savings Schemes

Interest Rates

1

Post Office Savings Account

4%

2

National Savings Recurring Deposit Account

5.8%

3

National Savings Time Deposit Account

5.5% - 6.7%

4

National Savings Monthly Income Account

6.6%

5

Senior Citizens Savings Scheme Account

7.4%

6

Public Provident Fund Account

7.1%

7

Sukanya Samriddhi Account

7.6%

8

National Savings Certificates (VIIIth Issue)

6.8%

9

Kisan Vikas Patra

6.9%

10

PM CARES for Children Scheme

N/A

Source: https://groww.in/p/savings-schemes/post-office-saving-schemes

Benefits of Post Office Savings Account

There are a plethora of benefits to opening a post office savings account. A few of them have been listed below:

  • iconbullet Post office savings schemes are highly secured since they are under the government's supervision, and the returns are fixed and guaranteed¹.
  • iconbullet Post offices are situated almost everywhere; hence there is higher reach, even in rural locales around India.
  • iconbullet There is a low minimum deposit that amounts to 50 rupees only, so even underprivileged people can avail of its benefits.
  • iconbullet There are many types of savings accounts to choose from that cater to almost every kind of individual.
  • iconbullet Most of these accounts don’t have a maturity period and can be withdrawn at any time and by anyone by producing the relevant documents and customer ID.
  • iconbullet These accounts can be transferred from one post office to another without much hassle.
  • iconbullet Most post office savings accounts also come with the benefit of ATM/Debit cards, so there is greater accessibility.
  • iconbullet Even minors can create a post office savings account, but the guardian or parent would manage the funds.
  • iconbullet A person can be nominated to whom the funds will be transferred on account of any unforeseen death of the account holder.
  • iconbullet An individual post office savings account can be converted into a joint account and vice versa.
  • iconbullet You can also open a post office savings account online through the IPPB app. So, it is quick and hassle-free.

How to open a Post office savings account

Opening a post office savings account is simple. Visit your nearest post office and procure an account opening form of your choice. Submit the necessary documents and your account will be immediately created.

The following documents are required for opening a post office savings scheme account:

  • Relevant account opening form
  • KYC registration form
  • PAN card, Aadhar, Driving license, Voter id for identity verification
  • The amount to be deposited
  • Job card or Proof of Employment, where applicable

You can also open a post office savings account online. For this, follow the steps mentioned below:

  • iconbullet Step 1: Get approval from your nearest post office for internet banking. This may take up to 24 hours.
  • iconbullet Step 2: Visit the official Internet Banking portal of the Post Office or the IPPB app.
  • iconbullet Step 3: Select the Savings Account of your choice on the POB Products page and click on the ‘Apply Now' button.
  • iconbullet Step 4: Fil in all the required details such as name, date of birth, permanent address etc.
  • iconbullet Step 5: Upload all the required documents for verification.
  • iconbullet Step 6: Review your form and then click on ‘Submit’.

Fee and charges of post office savings scheme

Usually, there are no additional charges or fees associated with opening a post office savings scheme account. Only the minimum deposit, along with the required documents, are required. However, charges are applicable for issuing a duplicate passbook, cheque book, and account transfers.

Follow the table below for the exact fees structure in a post office savings scheme:

Facilities

Fees

Transferring or pledging of a post office savings account

Rs 100

Cheque dishonour fee

Rs 100

Issuing a duplicate cheque book

Rs 50 per cheque book

Issuing a deposit receipt

Rs 20 per deposit receipt

Issuing an account statement

Rs 20 per account statement

Cancellation or a change of nomination

Rs 50 per change/cancellation

Issuing a passbook due to missing or mutilated certificate

Rs 10 per registration

Besides the charges mentioned above, there may be a few other scheme-specific charges such as the form charge for NSCs, etc.

Minimum and maximum saving limits in post office savings schemes

The minimum deposit amount varies based on the type of post office savings scheme. While the savings bank account has a minimum deposit limit of ₹50, the RD account has a limit of ₹100. A post office TD account has a minimum deposit limit of 1000 rupees and no maximum limit.

A POMIS account has a maximum limit of ₹4.5 lakh for individual accounts and ₹9 lakh for joint accounts, and the minimum limit is ₹1000. For an SCSS account, the minimum deposit is ₹1000, and the maximum limit is set at ₹15 lakhs. For a PPF account, the minimum deposit is set at ₹500, and the maximum deposit is 1.5 lakh per financial year.

For SSA accounts, the minimum deposit is set at ₹250, and the maximum limit is 1.5 lakhs per financial year. NSCs don’t have any maximum limit, and the minimum amount is set at ₹1000. For KVP accounts, the minimum deposit required is ₹1000, and there is no set maximum investment limit. Moreover, there is no deposit necessary for the PM CARES for Children Scheme.

Encashment /premature withdrawal of post office savings schemes

The premature closing of post office savings schemes varies depending on the type of account created. While the RD account can be prematurely closed after 3 years, a TD account can be closed within 6 months. There are no charges involved with a premature closing for the SB account.

For the premature closing of a POMIS account, there is a 1% deduction after three years and a 2% deduction if closed before three years. You can also close a POMIS account before one year with no benefits. For SCSS accounts, the deductions range from 1.5% before 3 years and 1 % between 3 to 5 years. There are no benefits if closed before one year.

For a PPF account, the closure is only allowed after 5 years with a 1% deduction on account of life-threatening ailments, death or if the resident Indian has gained an NRI status. SSA accounts can only be closed after 5 years on account of extreme compassionate grounds or unforeseen life-threatening events with no deductions.

NSCs can’t be closed prematurely unless there’s a court order or death of any of the holders. For KVP accounts, there are no premature withdrawal deductions after 2.5 years. There is also no premature closure for the PM CARES for Children Scheme.

Eligibility criteria to avail post office savings scheme

The eligibility criteria for a post office savings scheme depend on the type of account created. More information about the eligibility can be found on the respective scheme pages. It is recommended you go through the official websites for the same.

The following are a few of the requirements common to most the general post office savings schemes:

  • iconbullet Any Indian adult is allowed to start a post office savings account.
  • iconbullet In the case of a minor, he/she must be at least 10 years old.
  • iconbullet On behalf of a minor, a bona fide guardian may also open a post office savings account.
  • iconbullet For joint accounts, two or three persons are allowed to open a joint post office savings scheme account.
  • iconbullet Even if a person is not of sound mind, he/she can open a post office savings scheme account.
  • iconbullet For non-general schemes such as the KVP accounts, the relevant eligibility may also depend on the nature of work, earnings, age, et al.

Frequently Asked Questions on Post Office Savings Scheme

The monthly income is divided equally between the joint account holders in the case of a POMIS account. This amount is fixed based on the initial investment amount and paid every month.
If the investment amount is not withdrawn after maturity from a POMIS account, the amount will remain in the account and earn a simple interest for two years. You will stop earning any interest after two years elapse.
The accumulated maturity amount can be reinvested for the POMIS post office savings scheme. However, the initial account must be closed before opening another such account. The maximum and minimum limits are also applicable in this case.
Yes, the monthly interest earned from a POMIS account can be withdrawn and deposited into an RD account. This will ensure that the interest amount earned is maximised in an easy and hassle-free manner.
Under Section 80C of the Income Tax Act, a tax exemption is provided to all investors. Some post office schemes such as SCSS, SSY, and PPF, among others, also provide additional tax rebates on the interest amount earned.
You can deposit in a post office savings account by visiting the nearest post office. Or, you can visit the online banking website of the post office (IPPB) and open a post office savings account online to make deposits online.
Currently, there is no way to open a POMIS account online. You will have to visit your nearest post office with your KYC documents and two photographs to create such an account and invest in it.
To prematurely close your post office savings scheme account, visit your nearest post office branch with the necessary account documents and file a written document detailing the closure. There is no way to prematurely close your post office savings scheme account online.
Visit the nearest post office with your account details and enquire with the postmaster about the SSA balance. Or you can also check the SSA balance online by visiting the Post Office online banking portal. Then log in to your account with the right credentials and visit the SSA tab on the screen. You have to first apply for online login credentials at the post office before availing of these online benefits.
To open a PPF account in the post office, get a PPF application form from your nearest post office and fill it out. Take your KYC documents, such as the AADHAR card and passport size photographs and submit them along with the deposit amount. Your account will be created only upon the realisation of the initial deposit.
You can open a post office PPF account online by visiting the official India Post website. From the products page, select PPF account and click on the ‘Apply Now’ button. Fill in all the required details on the application form, submit the KYC documents for verification, and click on ‘Submit’. After successful verification, make your initial deposit, and the PPF account will be created.
You can check the post office PPF balance online by visiting the official India Post website or through the India Post Mobile app. Simply enter your account details and login in. Go to the account balance section of your profile and select PPF account. The amount will be displayed on the screen.
After activating your post office internet banking services, visit the official post office website. Then click on the ‘New User Activation’ tab and fill in all the required details. Set your login authentication, such as the password, and the account will be created automatically.
Visit the online banking website of the post office (IPPB) and select RD account. Then log in with your customer ID and view the DOP products page. Enter the instalment amount and duration. Deposit the amount through online banking methods by transferring it to the IPPB account. Lastly, you will receive a confirmation after a successful transaction.
Visit your nearest post office with the relevant account documents and a valid identity card. Upon verification by a post office banking official, he/she will provide you with the RD balance directly onto your passbook.
Visit the nearest post office and acquire the NSC application form by showing your identity proofs and paying the form purchasing amount. Fill it out and submit it along with your proof of identity and other KYC documents. You can buy this NSC form with cash, cheque or a demand draft drawn in the name of the postmaster of the particular office.
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    ¹ Provided all due premiums are paid.
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