Know more about Post Office Schemes, Small Saving Interest Rates (for Oct – Dec 2020)

 

Post office offers various types of deposit schemes each with varying duration for those looking to invest. These instruments are also known as Small Savings Schemes. The USP of these schemes is their sovereign guarantee, i.e., they are fully backed by the central government. Small savings Schemes have also thrived because they offer liquidity and higher returns than bank deposit. This is precise reason why investors of all ages and riches had invested and are continuing to invest in Post office’s “Small saving scheme”/

What’s more, key schemes such as National Saving Certificate (NSC), Senior Citizen Saving Scheme (SCSS) etc. also offer tax-saving benefits as investment under then comes under section 80C of the Income-tax Act, 1961.       

Till 2016-17, interest rates of these schemes used to be announced once in a year. However, now, the rates of interest are fixed on a quarterly basis. In line with this schedule, interest rates have been announced for Q3 of FY 2020-21 i.e. Oct to Dec 2020

Before heading to the latest interest rates, first let’s have a look at popular Small Saving Schemes that Post office is offering

Post Office Saving Account

Salient features of Post Office Saving Account are as below:

1) Account can be opened by

• A Single adult
• Joint Account (2 adults)
• Minor (above 10 years of age), or
• A guardian on behalf of a minor/person of unsound mind

2) Account can be opened in cash only. Minimum ₹ 500 is required to open the account.

3) Minimum balance to be maintained in an account is ₹ 500/- , if balance ₹ 500 not maintained, a maintenance fee of one hundred (100) rupees shall be deducted from the account on the last working day of each financial year and after deduction of the account maintenance fee, if the balance in the account becomes nil, the account shall stand automatically closed.

4) Cheque facility/ATM facility is available

5) One account can be opened in one post office. Account can be transferred from one post office to another

6) Interest earned is Tax-Free up to ₹ 10,000/- per year from the financial year 2012-13

7) Now Netbanking / Mobile Banking facility is available.

8) The facility to link with IPPB Saving Account is available. Check out our article on IPPB here.

https://www.growwealthadvisors.com/2020/08/india-post-payment-banking-mobile-app.html

Post Office Fixed Deposits

1) Account can be opened by

• A Single adult
• Joint Account (2 adults)
• Minor (above 10 years of age), or
• A guardian on behalf of a minor/person of unsound mind

2) Account can be opened in cash or thru cheque only. Minimum ₹1000 is required to open time /fixed deposit.

3) Single account can be converted into Joint and Vice Versa. Minor after attaining majority has to apply for conversion of the account in his name.

4) Any number of accounts can be opened in any post office. Account can be transferred from one post office to another

5) Premature encashment not allowed before expiry of 6 month, If closed between 6 month to 12 month from date of Opening, Post Office Saving Accounts interest rate will be payable

6) The investment under 5 Years Fixed Deposit qualifies for the benefit of Section 80C of the Income Tax Act, 1961

National Saving Certificate (NSC)

1) Account can be opened by

• A Single adult
• Joint A Account (max 3 adults)
• Joint B Account (max 3 adults)
• Minor (above 10 years of age)
• An adult on behalf of a minor or
• A guardian on behalf of a minor/person of unsound mind

2) Minimum of ₹ 1000/- need to be invested and further investment can be made in multiples of ₹ 100/- . There is no upper Limit

3) 6.8 % compounded annually but payable at maturity. This means ₹ 100000 grows to ₹ 138900 after 5 years

Read our detailed article on National Saving Certificate here.

https://www.growwealthadvisors.com/2020/10/national-saving-certificate-nsc-know.html

Sr Citizen Saving Scheme

1) As the name suggest individuals of the Age of 60 years or more may open the account under this scheme.

2) An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits

3) A depositor may operate more than one account in individual capacity or jointly with spouse (husband/wife)

4) Account can be opened by cash for the amount below ₹ 1 lakh and for ₹ 1 Lakh and above by Cheque only.

5) Maturity period is 5 years

6) Nomination facility is available at the time of opening and also after opening of account.

7) Any number of accounts can be opened in any post office subject to maximum investment limit by adding balance in all accounts. Account can be transferred from one post office to another

8) Premature closure is allowed,

(i) If closed before 1 year , no interest will be payable, if paid already will be recovered.

(ii) after one year on deduction of an amount equal to1.5% of the deposit to be deducted

(iii) after 2 years 1% of the deposit to be deducted.

Kisan Vikas Patra

1) Certificate can be purchased by        

• a single adult
• Joint A Account (Maximum 3 adults) 
• Joint B Account (Maximum 3 adults) 
• Minor above 10 years of age           
• An adult on behalf of a minor.           
• A guardian on behalf of a person of unsound mind

2) KVP will be issued in the shape of Passbook w.e.f. 01.07.2016. Minimum of ₹ 1000/- and in multiples of ₹ 100/- No Maximum Limit.

3) Facility of nomination is available

4) Certificate can be transferred from one person to another and from one post office to another.

5) Certificate can be encashed after 2 & 1/2 years from the date of issue

Monthly income scheme

This is very popular scheme if India post. The salient features are,

1) Account may be opened by  

• a single adult
• Joint Account (Maximum 3 adults)    
• Minor above 10 years of age           
• A guardian on behalf of a minor/Person of unsound mind.

2) Account can be opened by cash/Cheque

3) Any number of accounts can be opened in any post office subject to maximum investment limit by adding balance in all accounts (₹ 4.5 Lakh)

4) Account can be transferred from one post office to another. Single account can be converted into Joint and Vice Versa

5) Interest can be drawn through auto credit into savings account standing at same post office, or ECS. In case of MIS accounts standing at CBS Post offices, monthly interest can be credited into savings account standing at any CBS Post offices

Sukanya Samridhhi Yojana

                    

Sukanya Samriddhi Account aims to give every girl the opportunity to live her life to the fullest and achieve her dreams. The scheme has received tremendous response with deposits amounting to ₹ 55,573.54 Crore. Salient features are

1) A legal Guardian/Natural Guardian can open account in the name of Girl Child.

2) A guardian can open only one account in the name of one girl child and maximum two accounts in the name of two different Girl children.

3) Account can be opened up to age of 10 years only from the date of birth.

4) If minimum ₹ 250/- is not deposited in a financial year, account will become discontinued and can be revived with a penalty of ₹ 50/- per year with minimum amount required for deposit for that year.

5) Deposits may be made in the account till the completion of a period of fifteen years from the date of opening of the account

6) Partial withdrawal, maximum up to 50% of balance standing at the end of the preceding financial year can be taken after Account holder’s attaining age of 18 years.

7) Account can be closed after completion of 21 years.

8) Normal Premature closure will be allowed after completion of 18 years on the occasion of marriage (1 month before and 3 month from date of marriage) 

Now lets see interest rates for various Small Saving Schemes of India post