What is one age-old link to getting started with saving? Is it a bank savings account? That is not quite it – then what could it be, right? Well, we must say it is the post office, not just because it is backed by the Indian government, the oldest way of communication, or even one of the oldest forms of institutions.
But, in India, we think it is the most famous source of saving because it stretches out far and beyond – from every city, town, and village in the country. So, the post office in modern-day offers you so many ways to start saving. Here we can talk about the best schemes from the post office.
The Post Office Saving Schemes offer safe returns on investment and a variety of trustworthy products. These programs are run by over 1.54 lakh post offices that are dispersed throughout the nation. For instance, the government uses 8200 public sector banks and local post offices to manage the PPF program.
The Saving Schemes that are Offered by the Indian Post Office
The Post Office 5-Year RD Account
To start a national savings recurring deposit (RD) account with the Post Office Savings Bank, a depositor can fill out the purchase certificate form. The current 5-year program interest rate for both individual and joint accounts is 5.80% annually. The recurring deposit (RD) gives account holders the option to open a single account, a joint account (with a maximum of three adults), as the parent or guardian of a minor or a person of unsound mind, or even in the name of a juvenile above the age of 10.
The maximum monthly investment is uncapped, and cash or checks can be deposited at the branch or online or on a mobile device using the internet or mobile banking services offered to users of savings accounts. A depositor may claim an annual tax exemption on the post office RD program of up to INR 1.5 lakh under Section 80C of the Income Tax Act. Taxes are, however, levied on the interest received.
The Post Office Savings Account
The post office savings account resembles a traditional savings account in many ways. It is regarded as a highly secure instrument to deposit money into and provides the ability to quickly and completely liquidate money if necessary. These accounts are perfect for senior persons and those wishing to make a consistent income without taking on any risk because they often offer a guaranteed return on investment.
The Post Office Fixed Deposit Account
Interest rates on the well-known fixed deposit program offered by Post Office Savings Bank range from 5.50% to 6.70%. A depositor has the option of making a lump sum investment for a time frame of one to five years, and they can take advantage of a quarterly interest rate that will be paid upon maturity.
The time deposit investment matures in accordance with the deposits made for 1, 2, 3, 4, and 5 years. After six months, premature withdrawal is conceivable. After one year, interest will be calculated with a 2.0% reduction for early withdrawal. Based on Section 80C, a depositor may claim a tax exemption on their five year post office time deposit account.
The Monthly Income Scheme
The program allows account holders to benefit from the interest accrued on lump-sum deposits that are paid on a monthly basis. Both individual and combined accounts can earn 6.70% interest under the government-backed program. The Indian postal service offers single accounts, joint accounts (up to three people), accounts under the names of minors over ten years old, guardians or parents of minors, and accounts for disordered minds.
A minimum deposit of INR 1,000 is needed to start an account, while INR 4.50 lakh and INR 9 lakh are the maximum balances allowed for single and joint accounts, respectively.
The account may be closed five years after it was first opened. Premature closure, however, is not permitted before the year. Similarly, if the account is closed between one and three years, 2% is subtracted from the principle, and between three and five years, 1%. If the depositor passes away prior to the maturity period, nominees may submit a claim.
PPF is a government-backed fixed-income program that gives an annual interest rate of 7.10% and is a risk-free investment because the government guarantees its returns. The Indian Postal Service provides PPF to single accounts, guardians or parents of minors, and/or those who are mentally ill.
The PPF scheme offers an interest of 7.10% annually, which is set on a quarterly basis by the Ministry of Finance. At the conclusion of the year, the interest amount is credited to the depositor’s account. A depositor may claim a tax deduction for the interest generated below INR 1.50 lakh each fiscal year under Section 80C.
As the name implies, SSA is a government-sponsored program for girls that gives an annual interest rate of 7.60%. A guardian may open a single SSA account in the name of a girl under the age of 10, up to two girls in a household, and two accounts in the case of twins or triplets.
The Ministry of Finance sets the 7.60% annual interest rate that the SSA offers on a quarterly basis. At the end of the fiscal year – the interest amount is credited to the depositor’s account. A depositor may claim a tax deduction for the interest generated below INR 1.50 lakh each fiscal year under Section 80C.
National Saving Certificate
The government-sponsored 5-year NSC plan, which gives an annual interest rate of 6.80%, is available to all people. NSC offers single accounts, joint accounts (up to three people), accounts under the names of minors over ten years old, guardians or parents of minors, and accounts for disordered minds. The NSC offers a 6.80% annual interest rate that is compounded yearly and payable at maturity.
How to Choose the Best Scheme?
Choosing the best scheme comes to your financial goals, and only when the financial goals and the scheme align can you possibly start with your saving journey.
Make sure you ask yourself several questions, questions such as how much you can invest, how much time you have to save up, what you are saving for, and so much more. When you do ask yourself all of these questions, you will end up choosing the right kind of scheme that the post office offers you.