Post Office Saving Schemes-Benefits & Tax Implications

What is Post Office Saving Schemes?

Post Office Investments include a number of saving schemes that provide high rate of interest as well as tax benefits and most importantly, carry the sovereign guarantee of Indian Government. All these schemes are tax exempt under Section 80c, tax exemption up to Rs. 1,50,000 is allowed. Some schemes like Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), National Savings Certificate (NSC), Post Office Time Deposit for a 5 Year Term and Senior Citizen Savings Scheme (SCSS).

First of all, know the names of the post office millionaire schemes 4 post-millionaire schemes run in the post office.  But investment in them has to be done under a planning.  The names of these schemes are as follows.  The first is Public Provident Fund i.e. PPF.  The second is a recurring deposit, ie RD.  The third is National Savings Certificate i.e. NSC and the fourth is Time Deposit ie TD (Post Office FD).  Large funds can be created by investing in these post office schemes.

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Post Office Saving Schemes Account

A savings account in a post office is opened against minimum cash payment of Rs 500. The account holder is required to keep a minimum balance of the same amount. Failing to maintain the required balance leads to a maintenance fee of Rs 100 on the last working day of each financial year.

The post office offers various types of deposit schemes for those looking to invest. These instruments are also known as small savings schemes. The USP of these schemes is their sovereign guarantee, that is, they are backed by the central government. Some of these schemes such as NSC, SCSS etc. also offer tax-saving benefits under section 80C of the Income-tax Act,.

Types of Post Office Saving Schemes Available?

  • Public Provident Fund (PPF)
  • National Savings Certificate (NSC)
  • Post Office Monthly Income Scheme 
  • Sukanya Samriddhi Account(SSA)
  • Senior Citizen Savings Scheme
  • Post Office Savings Account
  • 5-Year Post Office Recurring Deposit Account
  • Post Office Time Deposit Account

1. Public Provident Fund (PPF)

PPF is one of the preferable schemes and is available with a lock-in period of 15 years. Nonetheless, investors can avail partial withdrawal after 5 years. A minimum deposit of Rs. 500 per year is required to keep the account active.

2. National Savings Certificate (NSC)

You can invest in NSC with a small deposit amount of Rs. 100 as a single individual, jointly or as a guardian of a minor. The lock-in period for this scheme is 5 years. Also, the annual interest on NSC’s is re-invested and paid out as an accumulated amount at the time of maturity.

3. Post Office Monthly Income Scheme 

This post office monthly savings schemes another reliable savings instrument that allows you to invest a maximum of Rs. 4.5 Lakh individually and Rs. 9 Lakh jointly. As an MIS plan, it allows investors to generate a steady monthly income.

4. Sukanya Samriddhi Account(SSA)

Under this Indian post office saving scheme, parents or legal guardians of any girl child up to 10 years of age are eligible to open this account in the child’s name. A maximum of 2 accounts is allowed for a household for two daughters individually. Once the child reaches 21 years of age, she is eligible to claim the maturity amount.

5. Senior Citizen Savings Scheme

Investors who are 60 years old, or 55 years old in case of voluntary retirement, can deposit up to Rs. 15 lakh over their lifetime in a Senior Citizen Savings Scheme to earn regular interest income. The plan also comes with a lock-in period of 5 years.

6. Post Office Savings Account

You can also open a savings account with the post office, which is similar to savings accounts opened with banks, by depositing a minimum of Rs.20. Also, you must maintain the account with a minimum of Rs.50. India Post also allows you to transfer money in your post office savings account online.

7. 5-Year Post Office Recurring Deposit Account

With small monthly investments, you can opt for as many RD accounts as you want with a post office. These investment options allow you to make periodic deposits while enabling substantial corpus creation over the tenure of investment.

8. Post Office Time Deposit Account

You can also open time deposits as a post office saving scheme for 1, 2, 3 and 5 years of tenure. Even minors over 10 years of age can invest in time deposits along with a guardian. The savings option is similar to fixed deposits offered by banks.

Interest Rate in Post Office

6.6% interest is currently being given on the post office monthly income scheme. 

5.5% interest is being given on 1 year time deposit of post office. 

present, 5.5% interest is being given on the 2-year time deposit of the post office.

At present, 5.5% interest is being given on the 3-year time deposit of the post office. 

6.7% interest is being paid on the 5-year time deposit of the post office. 

Interest of 6.9% is being given on Kisan Vikas Patra. 

At present, interest of 7.6% is being given on the Sukanya Samriddhi Yojana. 

At present, interest of 7.4 percent is being given on the Senior Citizen Savings Scheme.

Invest in Post office


Start investing 5000 rupees per month – increase it by 5% every year – 30 years, implement this investment scheme – Interest will be given up to 7% per annum – Fund of Rs 1 crore will be ready in 30 years Note: If you think  If interest rates are coming down in the future, then you can increase your investment every year accordingly.  For example, if you increase your investment by 6 or 7 percent instead of 5 percent every year, then after the decreasing interest rate, you will be able to make the child a millionaire.

1st Example

If you have 2 children, then do planning. In today’s time, most people have 1 child, while some people also have 2 children.  In such a situation, parents would want both their children to be millionaires.  So it is possible.  But for this you have to change your investment strategy.  However, you will have to start from Rs 5000 a month.  When you have two children, you start 2 investments separately.  Start investing 2500 – 2500 rupees in the name of both children in a bank or post office.  But now instead of 5 per cent in the name of children every year, increase the investment by 10 per cent. 

2nd Example

For example, where the names of both the children invest Rs 2500 – 2500 in the first year, increase it to Rs 2750 – 2750 a month from the next year.  Similarly, this investment should increase every year.  If the post office and the bank continued to get 7% interest on an average, then this investment would be Rs 1 crore in 30 years, ie Rs 1 crore for both children.  But if it seems that interest rates are coming down, then increase the investment to 11 or 12 percent every year instead of 10 percent.  This will make both children millionaires even after the reduced interest rate.

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