Post Office Investment: Saving Schemes & Interest Rates

Indian Post offers diverse investment options to cater to the varying needs of different investors. All Post office saving schemes guarantee returns as they are backed up by the government of India. Moreover, most of the post office investment schemes are tax-exempt under Section 80C, i.e. tax exemption up to Rs. 1,50,000 is allowed. Read on to know in detail about the various small saving schemes offered by the Post Office including Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), National Savings Certificate (NSC), Kisan Vikas Patra, Post Office Monthly Income Scheme, Senior Citizen Savings Scheme (SCSS) and more.
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Please Note:

*Interest rates are reviewed every quarter by the Government for these schemes and are updated as on October 2024.

 *Investing in Post Office Time Deposit, Post Office Recurring Deposit, Post Office Monthly Income Scheme, National Savings Certificate (NSC) and Kisan Vikas Patra (KVP) in a given quarter will lock-in the rate in that quarter for the entire tenure of the savings scheme. However, for Public Provident Fund (PPF) and Sukanya Samriddhi Yojana, the revised rate will be applicable in the concerned quarter and so on. In other words, the applicable rate keeps changing.

Post Office Savings Account

• Post Office savings account is like a savings account with a bank, except that it is held with a post office.
• Only one account can be opened with one post office and can be transferred from one post office to another.
• You can also open an account in the name of a minor. The Post Office savings account interest rate is 4% and is fully taxable. However, no TDS is deducted on the same.
• Under the non-cheque facility, the minimum balance which is required to be maintained is Rs. 50/-
• However a deduction of Rs. 10,000 per annum is available on your total savings account interest including post office savings interest under Section 80TTA of the Income Tax Act, 1961.

Post Office Monthly Income Scheme (POMIS)

• Unique scheme which offers guaranteed fixed monthly income on the lump sum investment made by the investor
• Any resident individual can open the MIS account in a single or joint holding pattern. A minor can also invest in this scheme. If the minor is of more than 10 years, then he can even operate the account
• The minimum limit for investment is Rs. 1000 and the maximum investment limit is Rs. 9 lakh in a single holding account and Rs. 15 lakh for joint accounts under the Monthly Income Scheme of Post Office
• Currently, the MIS interest rate in the post office is 7.4% per annum payable monthly with a maturity period of 5 years. For example, Mr. Suresh invests Rs. 2,00,000 in Post Office Monthly Income Scheme. He will receive Rs. 1233 every month as interest for 5 years. He will receive back the deposit on completion of the tenure. The amount so received monthly can also be further invested in post office recurring deposits.
• Investors can hold multiple accounts with a maximum investment of Rs. 9 lakh by combining balances in all the accounts. Joint accounts will have equal shares from all holders. If we continue with the above example, Mr. Suresh would be able to open a joint account with his wife for a maximum amount of Rs. 7 lakh
• Post Office monthly income scheme also offers liquidity by allowing investors to withdraw the deposit after 1 year. However, there will be a penalty of 2% on deposit if withdrawn between 1 year-3 years and 1% penalty on withdrawals after 3 years
• Accounts are transferable from one post office to another across the country

There is no major tax benefit in this scheme. Interest received on a monthly basis is a part of the taxable income. There is no TDS on the interest payout and deposits are exempt from wealth tax. Post Office Monthly Income Scheme is a preferable choice for risk-averse investors looking for regular monthly income. To know more click here

Post Office Recurring Deposit

• Post office RD is basically a monthly investment for a fixed period of 5 years with an interest rate of 6.7% per annum (compounded quarterly).
• On completion of the fixed tenure of five years, RD account with Rs. 10,000 invested every month will fetch you Rs. 1,13,659
• Post Office Account RD helps small investors by allowing them to invest as little as Rs.100 per month and above minimum any amount in multiples of Rs.10. There is no upper limit for the investment.
• Joint accounts can also be opened by two adult individuals. The account can also be opened in the name of a minor. Multiple accounts can also be opened.
• RD can be transferred from one post office to another.
• There is a default fee of 1 rupee for every 100 rupees in case you miss on any monthly investment.
• The account offers flexibility by allowing a partial withdrawal up to 50% of the balance after a year.

There is no TDS on interest from post office RD. However, income is taxable in the hands of investors as per their individual tax slab. It’s one of the best investment choices for every investor who is looking for a risk-free investment avenue to save some amount every month systematically.

Post Office Time Deposit

• Post office time deposit comes with different tenure options for investment. Current rate of interest applicable is below:

Tenure	Rate (w.e.f. 01.07.2024)
1 year Time Deposit	6.9%
2 year Time Deposit	7%
3 year Time Deposit	7.1%
5 year Time Deposit	7.5%

• The minimum amount that can be invested is Rs. 1000. There is no upper limit. There is no restriction on the number of accounts one can hold.
• Accounts can be opened in single holding or joint holding pattern. An investment in the name of minor is also allowed.
• Accounts can be transferred from one post office branch to another across India.
• Once the time deposit is matured, it will automatically renew for the same tenure again with the prevailing rate of interest on the day of maturity.
• There is a tax benefit for the investment made in the 5-year post office time deposit. The investment qualifies for the deduction under Section 80C of The Income Tax Act, 1961.

Kisan Vikas Patra (KVP)

• Kisan Vikas Patra offers an interest rate of 7.5% compounded annually. It can be purchased from any post office.
• The invested amount doubles every 115 months.
• The investment comes with a minimum limit of Rs.1,000, no maximum limit and can be made in multiples of 100.
• Certificates are easily transferable and can be endorsed to a third person.
• The certificate is comparatively liquid in nature as it offers an encashment facility after 2.5 years of investment.

There is no tax deduction on the principal amount invested and interest on the KVP is also taxable. Kisan Vikas Patra scheme is thus not tax-efficient. It works for new and small investors from remote areas who do not have access to other financial products.

Senior Citizen’s Savings Scheme

• The minimum entry age is above 50 years (for retired defense employees) for Senior Citizen Savings Scheme (SCSS). Someone who has taken voluntary retirement after 55 years of age can also open this account within a month of receiving the retirement benefits. The amount invested in such cases should not exceed the value of corpus received on retirement.
• Maximum limit of investment allowed per individual (combined balances in all accounts) is Rs. 30 lakh. The investment amount can be in multiples of Rs.1000.
• An individual can hold multiple accounts in his name or in joint holding with his spouse.
• Current rate of interest offered is  8.2% per annum payable on the first working day of each quarter. The deposit has a maturity period of 5 years. For an instance, if you invest Rs. 15 lakh in this scheme today, you will be receiving quarterly interest of Rs. 30,750.
• Senior Citizen Savings Scheme also allows premature withdrawals of deposits anytime after the date of opening the account but penalties are applicable in such cases. According to the latest government rules, 1% of the deposit amount will be deducted in case the SCSS account is closed before the expiry of one year of the investment.
• Account can be extended multiple times in blocks of three years after the inititial maturity period of 5 years.
• Investments are eligible for tax deduction under Section 80C of The Income Tax Act. However, the tax will be deducted at source if the amount of interest exceeds Rs.10,000 in a year.

Read more: Senior Citizen Savings Scheme (SCSS)

Public Provident Fund (PPF)

PPF is a long-term investment for a period of 15 years currently offered at an interest rate of 7.1% per annum (compounded yearly).  The maximum amount under this scheme is Rs.  1,50,000 in a financial year. Moreover, the deposit is qualified for deduction from income under Section 80C of the Income Tax Act.

• There is no minimum or maximum age for PPF account opening.
• Investments are allowed with the minimum amount of Rs. 500 and maximum of Rs. 1.5 lakh in a financial year. Investments can be made in lump sum or in installments.
• PPF Account can only be opened in a single holding form.
• You can invest in the name of minor also without exceeding your maximum limit of investment by combining balances of all your accounts.
• Maturity period can also be extended to 5 more years on completing the period of 15 years. You can keep extending maturity in blocks of five years, indefinitely.
• PPF is a pure long term investment plan with premature closure facility allowed only after 5 years from account opening and only for serious ailments or higher education. Partial PPF withdrawal is also permissible after the expiry of 5 years from the end of the year in which the account is opened.
• Investor can avail loan facility from the 2nd financial year to the 5th year of account opening.
• Investment in PPF account qualifies for tax deduction under Section 80C of The Income Tax Act. It also offers a tax efficient return as its interest is fully tax-free. However, you have to report PPF interest in your income tax return.

It is a good scheme for investors who want to get the tax exemption along with safety of principal and tax-free returns.

PPF Calculator – PPF Interest Rate, Loan, Maturity & withdrawal Calculator

National Savings Certificate (NSC)

• The NSC has a maturity period of 5 years. The NSC interest rate is 7.7% per annum compounded half-yearly but payable at maturity. That means, your investment of Rs. 100,000 will yield you Rs. 1,44,903 after 5 years.
• There is no maximum limit on investment with a minimum amount of investment of Rs.1000. Investments can be done in denominations of Rs.100, Rs. 500, Rs. 1,000, Rs. 5,000 and Rs.10,000.
• The NSC Certificate can be purchased in a single holding, joint holding (up to 3 adults), by a guardian on behalf of a minor/person of unsound mind or by a minor above 10 years in his own name
• Investment in NSC is tax deductible under Section 80C of The Income Tax Act. Interest on NSC is deemed to also be reinvested under Section 80 C and hence tax deductible, except interest in the final year of the NSC.
• NSC certificates can be pledged as security for availing bank loans.
• Certificates are transferable. Transfer from one person to another person is allowed only once during the investment tenure.

NSC is a risk-free and tax-efficient saving scheme for long-term and traditional investors with no risk appetite.

Sukanya Samriddhi Scheme

• Sukanya Samriddhi Yojana (SSY) is a  scheme introduced for the benefit of the girl child. It currently offers an attractive interest rate of 8.2% per annum compounded annually.
• The minimum amount of investment is Rs.1000 and maximum of Rs.1,50,000 in a financial year. You have to invest at least the minimum amount every year for 15 years from the date of account opening. Thereafter the account will continue to earn interest till maturity.
• Investment in the Sukanya Samridhhi Account is tax deductible under Section 80 C up to Rs. 1.5 lakh per annum. The interest on the Sukanya Samriddhi Account is also tax free and the maturity amount is tax free.
• Investment will mature after the completion of 21 years from the date of opening the account or upon marriage of the girl child after attaining the age of 18. The account will also have to be closed if the girl child becomes an NRI or loses her Indian citizenship.
• Sukanya Samriddhi account can be opened only in the name of girl child by her parents or legal guardians. Girl’s age should be 10 years or less on the date of opening the account.
• Multiple accounts cannot be opened in the name of one girl child. A parent/guardian can open maximum of two accounts in the name of two different girl children.
• There will be a penalty of Rs. 50 if minimum amount is not deposited in a financial year.
• Premature closure can only be done by a girl child on attaining the age of majority that is 18 years for the purpose of marriage or higher education.
• Girl can also avail partial withdrawal facility (not more than 50% of the balance) after attaining the age of 18 years.
• Parents/guardian can avail a tax benefit for the invested amount under Section 80C of The Income Tax Act. Maturity proceeds are paid to the girl child and are completely tax free in her hands.

SSY scheme has gained lot of popularity especially in rural India. It’s a good means to provide financial security to the next generation of women in the country.

Know all about Sukanya Samriddhi Yojana (SSY): Interest Rate, Benefits & Tax Rules

Interest Rate and Taxability on Different Savings Schemes

The interest rate and taxability on different Post Office savings schemes are as follows:

List of Schemes	Interest Rate and Return	Taxability
Public Provident Fund	7.1% p.a. compounded annually	Maximum deposit of Rs. 1,50,000 in a financial year is exempted under section 80C
Post Office Savings Account	4.00% p.a. on individual/joint accounts	Interest earned is Tax Free up to Rs. 10,000 p.a. from financial year 2012-13
Post Office Recurring Deposit Account	6.7% p.a. on individual/joint accounts	_
Post Office Time Deposit Account	6.9% (1 year), 7% (2 year), 7.1% (3 year) and 7.5% ( 5 year)	The investment under 5 Years TD is qualified for the benefit of Section 80C of the Income Tax Act, 1961 from 1st April 2007
Post Office Monthly Income Savings Account (MIS)	7.4% per annum payable monthly	The maximum investment limit is Rs. 9 lakh in single account and Rs. 15 lakh in joint account
Senior Citizen Savings Scheme	8.2 ​% per annum*	The maximum limit not exceeding Rs. 30 lakh and the investment under this scheme is qualified for the benefit of Section 80C of the Income Tax Act, 1961 from 1st April 2007
Kisan Vikas Patra	7.5% compounded annually	–
National Savings Certificate	7.7 % compounded annually but payable at maturity	The deposits are qualified for   for tax rebate under section 80C of Income Tax Act and the interest accruing annually but deemed to be reinvested under Section 80C of IT Act
Sukanya Samriddhi Accounts	8.2% p.a. calculated on the annual basis	Maximum deposit of Rs. 1,50,000 in a financial year

Note: *Please refer to the official website of Indian Post for more details of Senior Citizen Savings Scheme.

The above-mentioned interest rates are effective from 1st October 2024 and updated as on 4th October 2024.

Schedule of Fee

The schedule fee of Post office Investment Schemes are as follows:

Duplicate Passbook Issue	Rs. 50
Deposit Receipt or Issue of Statement of Account	Rs. 20/case
Issue of Passbook in Lieu of Lost or Mutilated Certificate	Rs. 10 per registration
Cancellation or Change of Nomination Charges	Rs. 50
Account Transfer Fee	Rs. 100
Pledging of Account	Rs. 100
Issue of Cheque Book (for Savings Bank a/c)	Nil: Up to 10 leafs in a calendar year Rs. 2 per cheque leaf thereafter
Cheque Dishonour Charges	Rs. 100

Note: T​ax as applicable shall also be payable ​on the above service charges

Advantages of Investing in Post Office Savings Schemes

Here are a few key benefits of investing in Post Office Savings Schemes:

• Simple Documentation & Procedure: Minimal documentation and hassle-free procedures make Post Office investment schemes easy to invest and enrol.  These savings schemes are suitable for both urban and rural investors they can be availed at Post Offices across the country. 

• Competent Interest Rates and Risk-free: Post Office Savings Scheme interest rates are highly competitive with bank interest rates and currently range between 4% to 8.2%. Also, the risk involved in these investments is minimal since they are backed up by the government. 
• Tax Exemption: Most of these Post Office Saving Schemes are eligible for tax rebates under Section 80C for the deposit amount. Some schemes like the SSS (Sukanya Samriddhi Yojana), PPF, etc. also have tax exemption on the interest earned amount and are thus, known as tax saving schemes or income tax saving schemes.
• Diverse Products to Cater Different Investment Needs:  These different Post Office Savings Schemes cater to the varying needs of different investors. The different investment schemes vary in their deposit limits, tax implications and return on investment and can be chosen as per the ínvestors’ unique requirements.

Aadhaar and PAN Now Mandatory for All Post Office Schemes

• According to the latest notification issued by the Ministry of Finance, it is mandatory to provide your Aadhaar number and PAN to open any new Post Office scheme/account. If you have not been assigned an Aadhaar card yet, you need to provide proof of application of enrollment for Aadhaar or enrollment ID at the time of account opening and furnish the Aadhaar number to the Accounts Office within 6 months from the date of opening the any post office account.
• If you already have an existing post office account and have not submitted your Aadhaar number, you need to submit your Aadhaar number within a period of 6 months with effect from 1st April 2023. In case you have not submitted your PAN at the time of opening the post office account, you need to submit the same within a period of 2 months from the date of happening of any of the following events, whichever is earliest, namely:

– The balance at any given time in the post office account exceeds Rs. 50,000

–  The aggregate of all credits in the account in any financial year exceeds Rs. 1 lakh

–  The aggregate of all withdrawals and transfers in a month from the account is more than Rs. 10,000

• Do note that in case you fail to submit Aadhaar within the specified period of 6 months and PAN within the specified period of 2 months your post office account will become inoperational till the time Aadhaar number and/or PAN is submitted to the accounts office

Note: We have taken this information from The Gazette of India. To read more, click on https://egazette.nic.in/WriteReadData/2023/244822.pdf

FAQs on Post Office Investment

Q1. How do I invest in the post office monthly income scheme?

Ans. Post Office Monthly Income Scheme is a low-risk plan with steady income. One can invest up to Rs. 9 lakh per month individually and Rs. 15 lakh in a joint account and earn 7.4% interest per annum. In order to invest in a post office scheme, every individual is required to have a MIS account.

Q2. Can I withdraw money from any post office?

Ans. Yes, money can be withdrawn from the Post Office account from any post office. Also, the account bearer can withdraw the money anytime. However, Rs.500 minimum balance must be maintained in case of a generic account.

Q3. How much can I withdraw from the post office account?

Ans. Maximum Rs.10,000 cash can be withdrawn per day from the post office account. But, with use of post office ATM card, Rs. 25000 can be withdrawn per day.

Q4. Can I check my post office account online?

Ans. Yes, Indian Post Office enables its account holders to access their respective account details, etc. using the internet banking facility. In order to register for net banking, the customer must have a valid individual or joint account, KYC documents and active DOP ATM card.

Q5. Is Post Office investment safe and tax-free?

Ans. Yes, it is safe as investments under Post Office bear sovereign guarantee of Government of India. All these schemes are tax-exempt up to a certain limit and some schemes like PPF, Sukanya Samridhi Yojna have tax benefits on returns as well.

Q6. Is there any Post Office Scheme for students?

Ans. All schemes except Senior Citizen Savings Scheme can be availed by students above 18 years. Sukanya Samriddhi Yojna (SSY) is a scheme for girl students where parents have to deposit a set standard of minimum amount or above that which upon maturity is given to the girl child when she turns 21.

Q7. What is the minimum balance required for an account?

Ans. The minimum balance required for an account (post office account) differs from the types of accounts as mentioned below:

SB(cheque account)​	Rs. 500
SB (non cheque account)​	Rs. 50
Post Office MIS Schemes	Rs. 100
TD​	Rs. 100
Public Provident Fund	Rs. 500
Senior Citizen​ Savings Scheme	Rs. 1000

Q8. How can I get encashment of certificates/account before maturity?

Ans. The encashment of certificates/account before maturity is as follows:

NSCs (VIII Issue)	Maturity period 5 years (for certificates issued on or after .01.11.2011). No premature encashment possible.
Different Savings Accounts
SB	Can be closed at any time
RD	Premature closure permissible (after 3 years – only SB rate is permissible)
TD	Premature closure permissible (after 6 months)
MIS Post Office Schemes	Premature closure permissible (after 1 year)
Senior Citizen Savings Scheme	Premature closure (after 1 year)