Post office deposit schemes\' interest rates

A post office offers various deposit schemes, also known as small savings schemes, to investors. The USP of these schemes is their sovereign guarantee, i.e., it is backed by the government. Some of these schemes also offer tax-saving benefits under section 80C of the Income-tax Act.

The interest rate offered on these schemes are reviewed and fixed every quarter by the government. Here is a look at these schemes:

Senior citizens aged 60 years or above can invest in this scheme to earn regular interest income. Interest on deposits under this scheme is payable quarterly. There is a lock-in period of 5 years for the principal but premature withdrawal is allowed after the completion of one year after paying a penalty. Currently, the maximum that can be invested in this scheme by any individual is capped at Rs 15 lakh.

The account can be opened either singly or jointly with your spouse. Deposits above Rs 1 lakh will be accepted via cheque only. The scheme qualifies for tax break under section 80C. Click here to read all about the Senior Citizen Savings Scheme.

The scheme comes under the 'Beti Bachao Beti Padhao' campaign. The scheme enjoys exempt-exempt-exempt (EEE) tax status. The investment amount, the interest earned and maturity amount are exempted from tax. Parents or legal guardians can open only one account per girl child and a maximum of two accounts in the name of two different girl children.

The maturity amount is payable after the completion of 21 years. Penalty will be levied if the minimum amount required is not deposited in a single financial year. Click here to know all about Sukanya Samriddhi Yojana.

Post office schemes
Instrument Interest rate (%) from 01.01.2019 Min Amt (Rs.) Max Amt (Rs.)
Senior Citizen Saving Scheme 8.70 1000 15 Lakh
Sukanya Samriddhi Accounts 8.50 1000 1.50 Lakhs
Public Provident Fund 8.00 500 1.50 Lakhs p.a.
5 Yr NSC - VIII Issue 8.00 100 No Limit
Time Deposit# 7.00 - 7.80 200 No Limit
Post Office Monthly Income Scheme 7.70 1500 Single 4.5 Lakhs
Post Office Monthly Income Scheme 7.70 1500 Joint 9 Lakhs
Kisan Vikas Patra 7.70 1000 No Limit
Recurring Deposits 7.30 10 No Limit
Savings Account 4.00 20 No Limit
#80C benefit available only for 5 Year Deposit
Data as on January 7, 2019
Source: Interest rates are as notified by Finance Ministry on 31.12.2018

PPF is another popular investment avenue which has EEE tax status. The scheme has a lock in period of 15 years but partial withdrawal is allowed from the seventh year. Loan facility is also available from the third year. Click here to know how to open PPF account.

PPF account cannot be attached by a person or entity in lieu of unpaid debt or liability. Even a court order or decree cannot make a person liable to pay off his debts using money from PPF accounts. Click here to know about lesser known facts about PPF.

Also Read: PPF loan and premature withdrawal rules

As the name suggests, National Savings Certificates (NSC) comes with a lock-in period of five years. Investment in the scheme can be made either singly, jointly or on behalf of a minor. The scheme also qualifies for deduction under section 80C. Here the interest is not paid but rather re-invested. The re-invested interest is also eligible for deduction under section 80C (except for fifth year).

Also Read: NSC or Bank FD: Which is better tax-saving option?

Post office also accepts time deposits, which are similar to a bank FD. A TD can be placed for any of the four tenures- 1, 2, 3, and 5 years. Even a minor above the age of 10 years can invest in the scheme. A five-year time deposit also offers tax benefit under section 80C. Click here to read how to invest in post office time deposit.

POMIS only offers monthly interest payment to investors. Individuals (singly or jointly) or minors aged 10 years and above can invest in the scheme. The scheme has a tenure of five years. The interest will be auto-credited into the investor's savings account at the same post office. The premature withdrawal facility can be availed after the completion of one year by paying some penal amount.

If you wish to double your investment amount, then you can look to invest in KVP. As for other small savings schemes the rate of interest is reviewed quarterly by the government and the time period in which the money invested doubles, therefore, varies with this interest rate. The rate and the time period normally remain fixed for one quarter.

To invest small fixed amounts of money at regular intervals, one can open a 5-year RD account with the post office. There is no limit on the number of accounts that can be opened. There is a default fee of Rs 0.05 for every Rs 5 of deposit. After 4 regular defaults, the account will be discontinued but can be revived within two months.

Rebate is offered on deposits made six months or more in advance of the due date. Post maturity, the RD account can be extended for another five years.

Like a bank savings account, one can also open a savings account with a post office and interest is paid on the balance in the savings account by the post office. Account can be opened with cash only with minimum of Rs 20 and no maximum limit. For a non-cheque facility account, minimum balance to be maintained is of Rs 50. To avail the cheque facility, minimum balance of Rs 500 is to be maintained.

Recently, government launched internet banking facility for the customers which can be accessed at https://ebanking.indiapost.gov.in.

Also Read: Three different accounts offered by India Post