Overview, Plans & Benefits of Post Office Saving Schemes
Post Office Savings Schemes
Post Office Small Savings Schemes are very popular among people who want to invest their money in the Govt. run instruments. These financial instruments provide you secure investment options with guaranteed returns. In India, Post Offices have a larger reach compared to any other financial product. So in remote places, they play the key role to penetrate financial inclusion.
The Post Office Saving Schemes include a bucket list of products that offer reliability and risk-free returns on investment. Even though the interest rates may not always be high, but you know that your money is safe. E.g. the rate of interest under Post Office Savings Account is just 4%, but if you want to keep your money liquid, then it might be a good option. However, there are other saving schemes in post office that will give you higher rates of interest, but you need to deposit the amount for a fixed time period.
Different Types of Post Office Small Savings Schemes
1). Post Office Savings Account
2). 5-Year Post Office Recurring Deposit Account (RD)
3). Post Office Time Deposit Account (TD)
4). Post Office Monthly Income Scheme Account (MIS)
5). Senior Citizen Savings Scheme (SCSS)
6). 15 year Public Provident Fund Account (PPF )
7). National Savings Certificates (NSC)
8). Kisan Vikas Patra (KVP )
9). Sukanya Samriddhi Accounts
Advantages of Post Office Saving Schemes in India
a. Easy to invest
The saving schemes are easy to enroll in and are best suited for the rural and as well as the urban investor, anyone who wants to hedge the risk in the portfolio for a fixed decent return. Their simplicity and availability makes these a much preferred savings option.
b. Simple procedure to enroll
Limited documentation and proper procedures in post office ensures that these saving schemes are simple to opt for and safe to be locked onto as they are also backed by the government.
c. Investments for long-term
The investments in the Post Office Schemes are more forward-looking and long-term oriented with the investment period extending up to 15 years for a PPF account. This acts as a huge help in retirement and pension planning.
d. Tax exemption
Most of these schemes carry with them tax rebates under Section 80C for the deposit amount. Few of the schemes like the PPF , the SCSS , the Sukanya Samriddhi Yojana, etc. also have the interest earned amount exempted from taxation.
e. Risk-free & competent interest rates
Interest rates range from 4% to 9% which is totally risk free. There is a minimal amount of risk involved as this is an undertaking by the government.
f. Different buckets of products
There is a different range of products based on different types of individuals. Public Provident Fund (PPF), Kisan Vikas Patra and Sukanya Samriddhi Yojana are some of the more well-known schemes.
The government has made these small savings schemes available via post offices to provide a safe investment avenue for the public. By giving them goods returns while keeping their money safe, these schemes are easy to manage. If the features and benefits iterated above meet your financial goals, invest in a post office savings scheme to secure your financial future at minimal risk.
How to open an account in post office?
You can open an account at any post office with a minimum balance. To do that, simply visit you nearest post office with the needed documents and complete the formalities. The lock-in or maturity period for different post office savings scheme are different, however, there is none for a savings bank account.
To open an account like Savings Bank (SB), Recurring Deposit (RD), Time Deposit (TD) or Monthly Income Scheme (MIS), you will need the SB3 and SB103 (pay-in-slip). Separate forms are there for senior citizen accounts. For SB account introduction is compulsory. Also, specimen signature slip is required for SB and TD. You can follow the below steps to open an account.
1). Go to your nearest or preferred post office, where you want to open an account.
2). Ask for the post office saving account opening form. Post office savings account online opening is not yet possible, however, you can download the form online from here.
3). Senior citizens have to use separate forms for post office account opening.
4). Fill in the form with all the needed details and submit it with the required documents.
5). The minimum amount varies for different post office saving schemes. Pay the initial amount that you want to deposit in your account.
6). Once your account is opened, you will be given the passbook.
Documents required for post office account
a). ID Proof
Copy of any of the following – Election Card, Ration Card, Passport, Driving License, Aadhaar Card or letter issued by UIDAI (Unique Identification Authority of India), photo ID card issued by recognized University/ Education Board/ College/ School/ Central or State Government/ PSU.
b). Address Proof
Copy of any of the following – Electricity Bill, Telephone Bill (not more than three months old), Passport, Ration Card, Aadhaar Card or letter issued by UIDAI, Bank or Post Office Passbook/ Statement.
c). Two recent passport size photographs.
In case of a joint account, photos of all the account holders will be needed.
Make sure you carry the original documents along with some extra copies.
Who can open a post office account?
The following people can open a savings account in post office:
b) Minors of age ten years and above
c) A guardian on behalf of a minor
d) A person of unsound mind
You can open a single account or two or three adults can open a joint account.
However, Group Accounts, Institutional Accounts and Misc. Account are not permissible. Also Trust, Regimental Fund and Welfare Fund are not authorized to open a post office savings account.
Features of Post Office Savings Account
1. You can open an account by cash only
2. One account can be opened in one post office
3. The account can be transferred from one post office to another
4. Nomination facility is available at the time of opening as well as after opening of account.
5. You can take the cheque facility at the time of opening or later on
6. A minor of 10 years and above age can open and operate an account along with a guardian
7. Joint account can be opened by two or three adults
8. A single account can be converted to joint account and vice versa
9. To keep an account active, it is mandatory that you perform atleast one transaction in three financial years
10. After reaching the age of 18, the minor has to apply for conversion of the account in his/her name.
11. Deposits and withdrawals can be done through any electronic mode in CBS Post offices.
12. Inter Post office transactions can be done between CBS post offices.
13. CBS Post Offices can grant ATM/Debit cards to all those account holders who have maintained the prescribed minimum balance on the day of issue of card
Post Office Saving Scheme for Tax Benefit
5 out of above schemes offer tax benefits under section 80C. They are Public Provident Fund (PPF), Sukanya Samriddhi Account (SSA), National Savings Certificate (NSC), Senior Citizens Savings Scheme (SCSS) and Time Deposit Scemes.
Previously, the post office savings interest rates were fixed for many years. However, after 2011 the rates on post office investment are linked to the rates on government securities (G-Secs) of similar maturity. They are reviewed on yearly basis and Govt. of India fixes these rates on every year March.