Since it is simple to deposit money into a savings account and withdraw funds when needed, most people prefer to have one. Compared to the previous era, the requirements for opening and maintaining a savings account have recently been relaxed. On the account balance, one can also make a respectable interest payment.
One can open a savings account with the Post Office in a manner similar to that of a bank. The Post Office Savings Account offers attractive interest rates in addition to other benefits.
What are postal savings plans?
The post is one of the preferred options for the salaried middle class in India, who want to invest in risk-free options with good returns. Recently, the government announced the prices of the small savings plans under its jurisdiction.
Currently, the government through the post office offers 9 different savings schemes for investment. They are as follows-
Public Provident Fund – The PPF is one of the most popular savings schemes and comes with a 15-year lock-in period. Investors can make a partial withdrawal from the PPF after the completion of 5 years of investment. This program requires a minimum deposit of Rs. 500 per year to ensure that the account remains active. Here are the main features of this scheme:
The PPF is a long-term investment with a lock-up period of 15 years. The current interest rate on the PPF is 7.1% per annum (compounded annually).
This scheme has no minimum or maximum age limit for opening an account.
Investments can be made with a minimum amount of Rs. 500 and a maximum of Rs. 1.5 lakhs is allowed in a financial year. Investors can invest in a lump sum or in 12 equal installments spread over the year.
National Savings Certificate (NSC) – The NSC or National Savings Certificate requires a small deposit of Rs. 100 by a single individual to start investing. It can also be opened jointly or by a natural person as guardian of a minor. The lock-up period for NSC is 5 years. Annual interest is reinvested and paid en masse at maturity.
NSC has a maturity period of 5 years.
The interest rate to be collected on this investment is 6.8% per year and is capitalized semi-annually. It is only payable at maturity. So, an investment of Rs. 100,000 can yield Rs. 1,38,949 after the completion of 5 years.
There is no maximum limit to the NSC investment. The minimum investment amount of Rs.100. Investments can be made in denominations of Rs.100, Rs. 500 rupees. 1000 rupees. 5,000 and 10,000 rupees.
Postal Monthly Income Scheme – This monthly savings scheme is a reliable savings instrument that allows a maximum investment of Rs. 4.5 Lakhs by an individual investor. A maximum of Rs. 9 Lakhs can be jointly invested in this scheme. The program is designed to allow investors to generate a stable monthly income. Here are the main features:
The scheme offers a guaranteed fixed monthly income on a lump sum investment
Any resident natural person is authorized to open an MIS account in sole ownership or in co-ownership. A miner can also invest in this device. Minors over 10 years old are allowed to manage the account.
The minimum investment limit in GIS is Rs. 1,500
Sukanya Samriddhi Account – Parents or legal guardians of a girl under 10 can invest in this program. An account must be opened in the name of the child. A maximum of 2 accounts is allowed per household for two girls individually. Once the child turns 21, they are eligible to receive the Maturity Amount. Some of the main features of this scheme are:
Sukanya Samriddhi is a program intended to benefit girls. It currently has an interest rate of 7.6% per annum and is capitalized annually.
The minimum investment amount is Rs.1000 and the maximum is Rs.1,50,000 in a financial year. An investor must deposit the minimum amount every year for 15 years from the date the account is opened. The account continues to earn interest until maturity.
Investments in the Sukanya Samridhhi account are tax deductible under Section 80 C up to Rs 1.5 lakh per annum. Interest earned on the Sukanya Samriddhi account is also non-taxable and the same is true for the amount at maturity.
Senior Citizen Savings Scheme – Investors who have reached the age of 60, or who are 55 in case of voluntary retirement, can deposit a maximum of Rs. 15 lakhs in a senior citizen savings scheme. The investment can be made throughout their lifetime to earn regular interest income. The plan has a lock-in period of 5 years.
Postal Savings Account – Investors can open a savings account at a post office, just like at banks. They can do this by depositing a minimum of Rs. 20. The account must be maintained with a minimum of Rs. 50 as balance. India Post allows investors to transfer money online from a postal savings account. Here are the main features:
This account is similar to a savings account with a bank.
Only one account is allowed with a post office and the account can be transferred from one post office to another.
An investor can also open an account in the name of a minor.
The applicable interest rate is 4% and is fully taxable. No TDS is applicable on the same.
5-Year Recurring Deposit Account at Post Office – Investors can open multiple RD accounts at a post office by depositing small amounts into each. These investment options require periodic filings to build up a substantial corpus over the life of the investment. Some of the features of this investment form are:
La Poste RD is a monthly investment for a fixed period of 5 years.
An interest rate of 5.8% can be earned per year (compounded quarterly).
After the fixed term of five years is over, an RD account with Rs. 10,000 deposited every month can earn Rs. 3,256.48.
The RD post office helps a small investor to invest as little as Rs.10 per month. Any amount can be deposited in multiples of rupees. 5 and there is no upper limit.
Post Office Term Deposit Account – An investor can open term deposits under the Post Office Savings Scheme for 1, 2, 3 and 5 years tenure. Even minors over the age of 10 are allowed to invest in time deposits if they apply through a parent or guardian. This option is similar to PEA term accounts.
Kisan Vikas Patra (KVP) – KVP certificates can earn double value of deposit amount in 9 years and 10 months. This deposit can be cashed out after completing 2.5 years by paying a nominal penalty. Some of the main features are:
The KVP interest rate is 6.9% compounded annually. This program can be purchased from any post office across India.
The amount invested doubles after the end of every 124 months (10 years and 4 months).
Investment can be made in denominations of Rs.1,000, Rs. 5,000, Rs.10,000 and Rs. 50,000. A minimum investment of Rs. 1,000 is required and there is no maximum limit of investment.
Benefits of diets
Risk Free – Every Postal Savings Program is government backed. For investors who wish to set aside money for future use, these are considered risk-free investment opportunities.
Attractive returns – Every three months, the Ministry of Finance can change the interest rates for all postal savings plans. Updated interest rates could be between 4% and 9%, offering investors considerable gains.
Easy investment process – These have simple application processes and little paperwork. Joining all savings plans is simple through post offices.
Sustainable investments – Since PEEs can last up to 15 years, they are generally suitable for long-term investments. As a result, investors could accumulate enormous wealth over time.
Perfect for all types of investors – Investors in postal investments come from all walks of life and various economic strata. Every resident of India has access to these investment schemes through India’s 1.55 million postal agencies, located in both urban and rural areas.
Tax Benefits – One of the key features of Postal Savings Plans is their tax efficiency. A few select programs, including National Savings Certificates, provide tax exemptions on deposits under Section 80C. Other programs, such as Kisan Vikas Patra, allow tax deductions on interest income.
Therefore, these postal systems are an excellent choice for those who wish to invest in a low-risk investment and obtain high returns. Savings options with attractive interest rates and no financial risks include PPF, National Savings Certificates and Sukanya Samriddhi Accounts. Moreover, the minimum investment required is modest and cheap. As a result, investors from various socio-economic groups can participate in these programs.