Post office savings scheme is similar to opening a savings account in the bank. However, the major difference here is that you open your account n a post office. Savings can act as a saviour for us in hard times. Hence, most of us start to save money as soon as we start earning. There are multiple ways of saving money, though, and one of them is opening a savings account. This way, you can get some interest amount on the money saved in your account. This interest amount is paid yearly by banks. Also, post offices provide many great options to save money. One of the most popular ones is the post office saving scheme.
It is a scheme started by the government with an aim for the investors to gain interest over their money invested in the scheme. Every post office across India offers a savings scheme for the benefit of people who cannot invest in big schemes. Now that you have a little bit of idea about this scheme, let us get into in-depth information. Get ready to know some exciting features of the post offices saving schemes.
Types of Post Office Savings Scheme
Savings schemes are high in demand as everyone in this fast-pacing world. Currently, there are 9 active saving schemes operational in India. Let’s have a look at those schemes and know about them in detail.
Public Provident Fund (PPF)
PPF is considered one of the preferable post office savings scheme that comes with a lock-in period of around 15 years. Hence, investors are allowed to get a partial withdrawal after five years. Also, a minimum deposit of Rs 500 is required every year to keep the account active.
National Savings Certificate (NSC)
Investing in NSC is easy as you can keep a small deposit of Rs 100 as a single individual, as a guardian of a minor or joint account. Also, this scheme has a lock-in period of around five years. The annual interest over the NSCs is again re-invested and paid out to the users as an accumulated amount during the maturity.
Post Office Monthly Income Scheme
It is another most reliable saving schemes, and this post office savings scheme allows a person to invest up to Rs 4.5 Lakhs individually and Rs 9 Lakhs jointly. It is an MIS plan that also allows the users to generate a steady monthly income with zero risks.
Sukanya Samriddhi Account
SSY scheme allows the parents or legal guardians of the girl child up to 10 years of age are allowed to open this account with the child’s name. Hence, a maxim of two accounts can be opened for a household for two daughters individually. Once the child reaches or crosses 21 years of age, she is eligible to claim for the maturity amount.
The maturity of the account can differ as per the girl child age during the time of enrollment. Thus, with a limit of up to 10 years of age, the maturity term of the account will be extended accordingly from 21 years age limit. For instance, if the girl child was five years old during the time of enrolment, the maturity year will be 21 years + 5 years, i.e., 26 years.
Post Office Savings Scheme for Senior Citizens
This senior citizen saving scheme is for the investors who are 55 years old in case of voluntary retirement and 60 years old during normal retirement. In this scheme, citizens can deposit up to Rs 15 Lakhs over their lifetime this scheme for earning regular interest income. This plan also comes with a lock-in period of 5 years.
Post Office Savings Account
Investors also have the opportunity to open a savings account with the post office, and it is pretty similar to the ones opened with the banks. These accounts need to have a minimum balance of Rs. 20. Moreover, you need to maintain a minimum balance of Rs. 50 in your account. India post allows you in transferring the money in your post office savings account online easily.
5-Year Post Office Recurring Deposit Account
You can choose to open as many as you wish RD accounts with the post office using a small monthly investment. Also, these investments allow you to keep periodic deposits while enabling substantial corpus creation during the time of investment.
Post Office Time Deposit Account
Any person can open time deposits as the post office savings scheme for 1, 2, 3 & 5 years of the overall tenure. Even minor people over ten years of age are allowed to invest in time deposits with their guardians. The savings option in this account or scheme is similar to the fixed deposit saving option offered by the banks. Plus, it is one of the most beneficial and preferred post office saving scheme launched by the government for the welfare of citizens.
Kisan Vikas Patra (KVP)
Kisan Vikas Patra or KVP certifications provide the chance to farmers to earn double the amount of deposit in 9 years and ten months of tenure. Apart from this, the deposit can only be encashed after 2.5 years of the policy. This enchased amount will be provided against the payment of the nominal penalty to opt-out of the scheme.
Benefits of Post Office Savings Scheme
Post office saving scheme is preferred mostly by people of small cities, villages and towns. That’s because of their inevitable benefits offered over the years. Here are a few of the paramount benefits of availing of this post office saving scheme.
Risk-Free and Reliable
One of the best things about the post office savings schemes is that they are government-backed regardless of any parameters. Therefore, they are considered a risk-free investment choice for parking your funds and generating extra income.
Attractive Return Generation
The Finance Ministry of India regularly updates the interest rates offered by every scheme under the post office saving scheme. The period to increase the interest rate is around 3 month. Moreover, the interest rate of the schemes is between 4% to 9%. It allows the investors to receive substantial returns of the money invested by them.
Simple Investment Process
The post office savings scheme have a simple application procedure that requires minimal documentation. Also, it provides you with an easy way to enrol in any of these saving schemes. You can visit your nearby post office to get detailed information regarding any of your desired schemes.
Long Term Investments
Most of the post office saving schemes have long term investments plans, and they can run up to 15 years. Hence, a long tenure such as PPF offers the investor a chance to accumulate the sizeable fund over time. Also, these plans can be considered effective plans for providing financial security along with some retirement benefits.
Availability to Investors Across India
The post office investment schemes are specifically designed for covering the investors from every corner of the content and various economic strata. There are more than 1.55 lakh post office branches in India, from rural to urban, to every citizen has access to avail any of these schemes. Hence, they need to meet the eligibility criteria for the scheme to enjoy its perks.
Tax Benefits on Post Office Savings Scheme
Tax efficacy is among the highly acknowledged feature offered by the post office saving scheme. Some of these schemes have National Saving Certificates that come with tax exemption on the deposit amount as they lie under Section 80C. Plus, the schemes such as Kisan Vikas Patra provide tax dedication on the earned interest.
Various Types of Product
India post office savings schemes are the options that are spread over different types of investment and saving products to meet the need of multiple investors. The financial products of the scheme are recurring deposit, saving deposit, fixed deposit, saving certificates, monthly schemes and many more. Additionally, the investors have the option to choose from these options according to their financial goals.
Who is Eligible For Post Office Saving Scheme?
Investors who prefer to go with a no-risk investment portfolio along with significant return generate can choose these postal schemes. The saving parkways such as National Savings Certificates, PPR, and Sukanya Samridhi Accounts have an attractive interest rate and low financial risks.
Moreover, the minimum investment amount for these schemes is low and affordable, so investors from the lower economic class can invest in any of these schemes easily. Every scheme has different eligibility criteria, and to know about them, it’s better to visit a post office and get the required information.
Steps to Enroll in Post Office Saving Scheme
It is easy to enrol or apply any of the above post office saving schemes with the steps below. Let’s have a look at these steps.
The very first step is to visit your preferred post office and choose the desired scheme.
Next, you need to get all the information related to the scheme you are interested in for better knowledge. Hence, this information can include their interest rate, benefits, risks, duration, eligibility and many more. Also, you can download the information form from the website of the Indian post office.
After this, download and print the form, or you can get it from your nearby post office. Fill the form with all the required details and submit it along with your KYC proof, photographs and photocopies of important documents if required. Some of the schemes might not require any additional documents, while some of them might need them. So, you should read their details before filling in the form to know which documents would be probably required.
Once you have submitted your form along with documents and photographs, you need to complete the enrolment by depositing the amount as per your desired investment schemes. However, the charges might be different for every individual depending upon the scheme and eligibility criteria of the scheme.
FAQ on Post Office Saving Schemes
Here are some of the frequently asked questions about the post office saving schemes.
Is it Safe to Invest in a Savings Scheme With the Post Office?
Yes, all the Indian post office schemes are backed by government organisations. Thus, they are termed as credible and reliable institutions to invest in. Moreover, you have the option to choose from multiple schemes with zero financial risk and great interest benefit.
Do the Post Office Schemes Provide Tax Benefits?
Yes, any person who has availed of post office schemes can go for tax exemptions and deductions on their investments without hassle. Some schemes have a policy of tax deduction over the deposit amount or the earned interest. Also, it can be on both depending upon the scheme policies.
Can I Withdraw Money from Any Branch of the Post Office?
Yes, you can withdraw money from any of the post office branches. The process to withdraw money is similar to bank withdrawals, and you are also allowed to withdraw money from any post office across India.
In a Nutshell
Now that you know there are multiple advantages of choosing the post office saving schemes, others prefer investing in them. The schemes mentioned above have different policies that are subjected to change as per government rules. Therefore, it would be better to read their details and policies carefully before investing or enrolling in the scheme.