Looking to earn more benefits with your hard earned money? It would be suitable to deposit in a postal savings account as it offers a double benefit and offers higher interest rates than regular banks. In addition, depositors will not have to pay interest tax of up to Rs 3,500 in a fiscal year. In the case of a joint account, the exemption goes up to Rs 7,000.
Interest rates have fallen considerably in recent years. For example, the interest rate offered by India’s largest public sector bank, the State Bank of India, has fallen to 2.7% per annum. But post office savings accounts still offer a 4% return.
To open a savings account at the nearest post office would require valid KYC documents as well as an initial deposit of Rs 500. Therefore, interest on the post office savings account is calculated on the minimum balance between the 10th of each month and the last day of the month.
But if the customer does not even manage to guarantee the minimum account balance of Rs 500 at the end of the fiscal year, the post office will reduce the account maintenance fee by Rs 100. If the balance returns to zero, the account post office savings will be automatically closed.
Many retail investors prefer small savings instruments such as postal savings accounts because they offer a better return than the regular savings account. The mail-in savings program is almost risk-free and is considered a decent option for investors who do not wish to put their money at risk in the hope of a better return.
The central government reviews the interest rates offered by this scheme on a quarterly basis and changes it according to market conditions. For the July to September quarter, the government kept the interest rate unchanged.