Post Office Small Savings Schemes are very popular among people who want to invest their money in the Govt. run instruments. These financial instruments provide you secure investment options with guaranteed returns. In India, Post Offices have reached over a large area. So in remote places, they play the key role to penetrate financial inclusion.
Even though the interest rates may not always be high, but you know that your money is safe. E.g. the rate of interest under Post Office Savings Account is just 4%, but if you want to keep your money liquid, then it might be a good option. However, there are other saving schemes in post office that will give you higher rates of interest, but you need to deposit the amount for a fixed time period.
In this article I will discuss about the different Post Office Small Savings Schemes, Post Office interest rates and the importance of post office saving scheme for tax benefit.
What are Post Office Saving Schemes?
Post office schemes are designed to provide financial security to general people with guaranteed return on investment. More than 1.54 lakh post offices are there In India, among which 89% is spread across the rural areas. Small Savings Schemes are operated mostly through these branches along with public sector banks. Around $137 Billion (Rs. 9 Lakh Crore) are tied up with Small Savings Scheme.
Also Govt. of India provides tax benefit to many postal saving schemes like senior citizen savings scheme, national savings scheme, Sukanya Samriddhi Account etc.
Different Types of Post Office Small Savings Schemes
Different types of post office small savings schemes that are currently functioning are as follows:
- Post Office Savings Account
- Post Office Recurring Deposit Account (RD)
- Post Office Fixed Deposit Account (FD/TD)
- Post Office Monthly Income Account Scheme (MIS)
- Senior Citizens Saving Scheme (SCSS)
- Public Provident Fund Account (PPF)
- National Savings Certificates (NSC)
- Kisan Vikas Patra (KVP)
- Sukanya Samriddhi Account (SSA)
Post Office Interest Rates Table
New interest rates on Post Office small savings schemes are fixed for the FY 2016-17. All these have a fixed locking period except post office savings accounts. You can find the current post office savings interest rates in the table below.
|Scheme||Interest Rates 2016-17||Minimum Deposit||Investment Period|
|Savings Deposit (SD)||4.0%||Rs. 20||NA|
|1 Year Time Deposit (TD)||7.0%||Rs. 200||1 Year|
|2 Year Time Deposit (TD)||7.1%||Rs. 200||2 Years|
|3 Year Time Deposit (TD)||7.3%||Rs. 200||3 Years|
|5 Year Time Deposit (TD)||7.8%||Rs. 200||5 Years|
|5 Year Recurring Deposit (RD)||7.3%||Rs. 10/ Month||1 to 10 Years|
|5 Year Senior Citizens Savings Scheme (SCSS)||8.5%||Rs. 1000||5 Years|
|5 year Monthly Income Scheme (MIS)||7.7%||Rs. 1500||5 Years|
|15 Year Public Provident Fund (PPF)||8.0%||Rs. 500||15 Years|
|Kisan Vikas Patra (KVP)||7.7%||Rs. 1000||9 Years 5 Months|
|Sukanya Samriddhi Account Scheme (SSAS)||8.5%||Rs. 1000||21 Years|
You can refer to India Post Official Site for more details on all the above schemes.
Post Office Saving Scheme for Tax Benefit
5 out of above schemes offer tax benefits under section 80C. They are Public Provident Fund (PPF), Sukanya Samriddhi Account (SSA), National Savings Certificate (NSC), Senior Citizens Savings Scheme (SCSS) and Time Deposit Scemes.
Previously, the post office savings interest rates were fixed for many years. However, after 2011 the rates on post office investment are linked to the rates on government securities (G-Secs) of similar maturity. They are reviewed on yearly basis and Govt. of India fixes these rates on every year March.
Some of the post office small savings schemes offer higher returns compared to many other saving schemes. So, if you are a low risk taker, it might be a good choice to deposit in PO schemes for a longer time period. Do you prefer to invest in small deposit schemes? Are you happy with the post office interest rates? Please feel free to share your thoughts and experiences of investing in post office savings account.