Post office savings schemes: The government revises rates of small savings schemes, including post office plans, every three months. Interest rates were left unchanged for the April-June 2024 quarter for these small savings schemes. Despite no increase in rates of these savings instruments, these post office schemes are still giving better returns than most bank fixed deposits (FDs), especially those by public sector banks.
Post-office savings schemes give investors many options with interest rates up to 8.2%. Most of these post-office schemes offer tax benefits also under Section 80C of the Income Tax Act. It is, however, suggested that investors should carefully evaluate the tax implications of these post office savings schemes before making investment decisions. Here we will discuss various features, tenures and returns of top 5 post-office savings schemes.
Senior Citizen Savings Scheme (SCSS):
Senior Citizen Savings Scheme is backed by the Government of India. Senior citizens residing in India can open an account and invest a lump sum amount in the scheme. They can open an account, individually or jointly, and get regular income along with tax deduction benefits.
Interest Rate: 8.2% per annum, effective January 1, 2024.
There shall be only one deposit in the account in multiple of Rs 1,000 and the maximum amount must not exceed Rs 30 lakh, according to the India Post website.
Kisan Vikas Patra:
Kisan Vikas Patra is a savings certificate issued by the Indian government. The scheme offers a fixed rate of interest and guaranteed returns. There is no tax deduction benefit available.
Interest Rate: 7.5% compounded annually (Amount invested doubles in 115 months or 9 years and 7 months).
Minimum amount for opening of account and maximum balance that can be retained: Minimum of Rs 1,000 and in multiples of Rs 100. There is no maximum limit for investment.
Post Office Monthly Income Scheme Account (MIS):
Post Office Monthly Income Scheme gives an opportunity for investors to earn a steady income. One can invest a minimum of Rs 1,500 and a maximum Rs 9 lakh, while the maximum limit for joint accounts is Rs 15 lakh. The earned interest is taxable and does not get exemption under Section 80C.
Interest rate: 7.4% per annum (payable monthly).
Other features:
(i) Interest shall be payable on completion of a month from the date of opening and so on till maturity.
(ii) If the interest payable every month is not claimed by the account holder such interest shall not earn any additional interest.
(iii) In case any excess deposit made by the depositor, the excess deposit will be refunded back and only PO Savings Account interest will be applicable from the date of opening of account to the date of refund.
National Savings Certificates (NSC):
National Savings Certificates is a guaranteed investment and savings plan with complete capital protection, just like other fixed-income instruments.
Interest rate: 7.7 % compounded annually but payable at maturity.
Key features:
Any individual can open a single account while a joint account can be opened by three persons. A guardian on behalf of a minor or on behalf of a person of unsound mind can also operate the NSC account. Under the scheme, a minimum deposit of Rs 1,000 is allowed and in multiple of Rs 100, with no maximum limit.
Any number of accounts can be opened under the scheme and the deposits qualify for deduction under section 80C of Income Tax Act.
Mahila Samman Savings Certificate:
Mahila Samman Savings Certificate is an initiative by the government aimed at cultivating a savings culture among Indian women. However, this scheme does not provide any tax benefits. Interest income is taxable, with tax being deducted based on the individual’s income slab.
Interest rate: 7.5% interest per annum. Interest will be compounded quarterly and credited in account and paid at the time of closure of account. Account opened or deposit made in-contravention of rules will be eligible for interest @ PO Savings Account.
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