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Post Office Schemes

Post Office Savings Scheme Interest Rate, 2021

Last Updated 04th Dec 2021

SchemeInterest RateTax Rebate
PPF7.10% p.a.Tax deductions on the principal amount, Interest earned and the amount received at maturity.
National Savings Certificate7.9% p.a.Tax deductions upto ₹ 1.50 Lakh on principal amount.
Post Office Monthly Income Scheme7.6% p.aNo tax rebate
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What are Post Office Savings Schemes?

Post Office Savings Schemes are government-backed small savings schemes that were introduced to instil a habit of savings across all economic classes. These schemes are accessible in all parts of India including rural and remote areas that are relatively under-banked and have limited access to investment products. There are various savings schemes provided by the Post Office, and some of the savings schemes are exclusively investment instruments of the Post Office. Under these schemes investors can get assured returns on their investments along with tax benefits.

Types of Post Office Savings Schemes

The various savings schemes offered by the Post Office are mentioned below.

  • Public Provident Fund: PPF or Public Provident Funds are government-backed savings schemes provided by both banks and post offices. It is a long term saving scheme that has a lock-in period of 15 years and can be extended in a block of 5 years. You need to deposit a minimum of ₹ 500 in a post office PPF account and can deposit upto ₹ 1.50 Lakh in your accounts. Along with providing guaranteed returns, investors can also get tax deductions on the principal amount of investment, interest earned and the amount received at the maturity.
  • National Savings Certificate: National Savings Certificates is a fixed investment scheme that can only be opened at the post office for a tenure of 5 years. The minimum amount required to invest in NSC is ₹ 100 and there is no cap on the maximum amount that one can invest in NSC. Investors can get tax deductions upto ₹ 1.50 Lakh on their investment under Sec 80 C of the Income Tax Act.
  • Post Office Monthly Income Scheme: Post Office Monthly Income Scheme is a saving scheme that allows investors to get regular monthly income as they make a lump-sum investment for a tenure of 5 years. You need to deposit a minimum of ₹ 1,500 in your accounts and can invest upto ₹ 4.50 Lakh and ₹ 9 Lakh in a single holding and joint accounts, respectively. This saving scheme, however, does not provide any tax benefits.
  • Sukanya Samriddhi Yojana: SSY is a post office saving scheme for the girl child provided by both banks and post offices for the girl child aged 10 years or below. Parents/ Guardians can open the SSY account in a post office for a tenure upto 21 years. To keep the account active, they need to make a minimum investment of ₹ 1,000 and can invest upto ₹ 1.50 Lakh every year. Investors can also get EEE( Exempt- Exempt- Exempt) tax benefit on their investment.
  • Senior Citizen Savings Scheme: Senior Citizens Saving Scheme is an investment scheme for senior citizens above the age of 60 years for tenure upto 5 years. The individuals who are aged between 55 years and 60 years and have opted for Voluntary Retirement Scheme can also avail the benefits of SCSS. They need to make a minimum investment of ₹ 1,000 in their accounts and can invest upto ₹ 15 Lakh. Senior Citizens can get tax exemptions upto ₹ 1.50 Lakh on the investment under Sec 80 C of the Income Tax Act.
  • Post Office Savings Account: Post Office Savings Accounts are savings accounts similar to the savings accounts in the bank except that they can only be opened at a post office. Investors need to deposit a minimum of ₹ 50 and ₹ 500 for non-cheque accounts and accounts with cheque facility respectively. There is no fixed tenure for maintaining your Post Office Savings Account.
  • Post Office Time Deposit: Post Office Time Deposit offered by Indian Post Office is similar to fixed deposits offered by banks and can be opened for a tenure ranging between 1 to 5 years. You need to invest a minimum of ₹ 100 in Post Office Time Deposit and there is no limit on the maximum amount of investment. Investors can get tax deductions upto ₹ 1.50 Lakh on Time Deposits for 5-year tenure under Sec 80 C of Income Act.
  • Post Office Recurring Deposit Account: Post Office Recurring Deposit Account scheme is a term deposit that allows people to deposit a fixed amount every month for a tenure of 5 years which can, however, be extended. They can invest as less as Rs 10 every month and earn returns at the fixed deposit rates. Under Sec 80 C of the Income Tax Act, investors can get tax exemptions upto ₹ 1.50 Lakh on their investments.
  • Kisan Vikas Patra: Kisan Vikas Patra is a small savings instrument that allows you to double a one time lump time investment in a tenure of about 10 years and 4 months. Investors need to make a minimum deposit of ₹ 1,000 , and there is no cap on the maximum amount that can be invested in a KVP scheme. The scheme, however, does not provide any tax rebate on investment.

Compare Post Office Savings Schemes Interest and Taxability

SchemeInterest RateTax Rebate
PPF7.10% p.a.
  • Tax deductions on the principal amount, Interest earned and the amount received at maturity.
  • Under Sec 80 C, tax deductions upto ₹ 1.50 Lakh on principal amount.
National Savings Certificate7.9% p.a.Tax deductions upto ₹ 1.50 Lakh under Sec 80 C.
Post Office Monthly Income Scheme7.6% p.aNo tax rebate
Sukanya Samriddhi Account8.50% p.a.
  • Tax deductions on the principal amount, Interest earned and the amount received at maturity.
  • Under Sec 80 C, tax deductions upto ₹ 1.50 Lakh on principal amount.
Senior Citizen Saving Scheme8.6% p.aTax deductions upto ₹ 1.50 Lakh on investment under Sec 80 C and TDS rebate of ₹ 50,000 on interest earned.
Post Office Savings Account7.25% p.a.Tax deductions upto ₹ 50,000 on interest earned.
Post Office Time Deposit5.50% to 6.70% p.a.Tax deductions upto ₹ 1.50 Lakh on a 5-year Time Deposit
Post Office Recurring Deposits6.80% p.a.No tax rebate
Kisan Vikas Patra7.6% p.aNo TDS on amount received at maturity.

Post Office Savings Schemes Benefits

Post Office Investment Schemes are suitable for both rural and urban investors and offer the following benefits.

  • Reliable: As the savings schemes provided by the Post Office are backed by the government, they can be considered as risk-free investments instruments to park the savings.
  • Assured returns: The government determines the rate of interest on the Post Office Savings Scheme, and thus investors can get assured returns on the investment. These rates are revised by the Finance Ministry every quarter and range from 4% to 9%. Along with that is also a post office scheme to double the money with a minimum deposit of ₹ 1,000 .
  • Saving scheme for all classes: Post Office Savings Scheme are suitable across all economic classes in rural and urban India. With the availability of around 1.5 Lakh post office branches in India, investors can easily invest in these schemes.
  • Tax benefits: Investors can also get tax deductions upto Rs 1.5 Lakhs on their investments under Sec 80 C of the Income Act on most of the savings schemes provided by the post office. On savings schemes like PPF, SSY one may also get additional tax exemption on interest earned and the amount received at maturity.
  • Wide range of products: The savings schemes offered by the post office are diverse and flexible. Investors can choose the investment instrument from a wide range of products as per their financial goal. The savings schemes offered by the Post office are Post Office Time Deposit, Kisan Vikas Patra, Senior Citizen Savings Scheme etc.

FAQs

Is it safe to invest in a savings scheme with the post office?

Yes, savings schemes offered by the Post Office are secured by the government and the rate of interest on these schemes are also revised by the Finance ministry every quarter. Thus, it is safe to invest in a savings scheme with the post office to get assured returns on investment.

Is Post Office investment tax-free?

Yes, most of the savings schemes offered by the post office provide tax deductions upto Rs 1.5 Lakhs on investment under Sec 80 C of the Income Tax Act. However, some schemes such as Post Office Monthly Income Scheme and Post Office Recurring Deposit do not offer any tax rebate.

Is there any Post Office Scheme for students?

Yes, students above the age of 18 years can invest in savings schemes offered by the post office. SSY or Sukanaya Samriddhi Yojana is one investment scheme by the post office in which parents or legal guardians can invest for their girl child aged 10 years or below.

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

To invest in the post office monthly income scheme, you must have a savings account with the post office. You can then invest in the scheme by making a lump-sum payment through a dated cheque.


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