Top 9 Post Office Schemes For Investment Planning

Wondering which post office scheme suits your strategy? From savings accounts to senior citizen plans, see how you can benefit from these options!

Post office schemes in India are generally considered for their security and accessibility. Operated through a network of more than 1.5 lakh post offices (PO), they tend to attract those seeking safer investment avenues. These schemes, often government-backed, usually offer dependable returns. Post office schemes also assist in financial planning, with tax deductions up to ₹1.5 lakh under Section 80C of the Income Tax Act. Interest rates typically range from 4% to 8% per annum, offering various options for different financial needs. This mix of potential returns and tax benefits makes post office schemes a practical choice for many investors.

What are the best post office schemes?

1 Savings account

The PO savings account has the potential to be secure and flexible. You can start your account with ₹500, without any ceilings on deposits.

• Interest rate: 4% annually (till September 2024), calculated on the lowest balance from the 10th to the month’s end.
• Account options: Open an account individually, jointly, or for a minor. Children aged 10 and above can manage their accounts.

Key benefits include:

• Cheque facility: Available if you keep a minimum balance of ₹500.
• Tax exemption: Interest up to ₹10,000 annually is tax-free under section 80 TTA.
• Account management: Nominate beneficiaries, move your account between post offices, and switch between single and joint accounts.

Make sure at least one transaction every three years in order to keep your account active. This account can offer a dependable and effective means of increasing your money.

2 Recurring deposit account

The PO recurring deposit account is ideal for disciplined savings. Begin with ₹100 monthly, with no cap on the amount you can deposit.

• Interest rate: Currently as of July 2024, 6.7% is the annual interest rate, compounded quarterly.
• Account options: Same as savings a/c.

Unique features:

• Advance payments: You can make deposits for 6 or 12 months in advance and benefit from a rebate.
• Withdrawals: Access up to 50% of your balance after one year.
• Account management: Nominate beneficiaries transfer your account between post offices, and switch from single to joint ownership.

Make sure monthly deposits are timely to avoid penalties. The plan can be renewed yearly for an additional five years after it matures in five years.

3 Time deposit account

For a structured savings plan, you can also consider the PO time deposit account. It offers multiple tenure options to suit your needs: 1, 2, 3, or 5 years.

Initial investment: You can begin with ₹1000. Additional deposits should be in multiples of ₹100.

Interest rates:

• Calculated quarterly but credited annually.

Year	Rate of interest (%) (as of July 2024)
1	6.9
2	7
3	7.1
5	7.5

Source: NSI

Types of accounts:

• Open individually or jointly.
• Suitable for minors, managed by guardians or by minors aged 10 and above.

Special features:

• Premature closure: Allowed after six months, with early closure before a year earning the standard savings rate.
• Tax deduction: Investments in the 5-year plan qualify u/s 80C benefits.
• Flexibility: Convert single to joint accounts, transfer between post offices, and also add nominees.

4 Monthly income account scheme

For those seeking regular returns, the post office monthly income account scheme can offer a good solution.

Investment limits:

• Minimum: ₹1000.
• Maximum deposits: ₹9 lakhs for individuals, ₹15 lakhs for joint holders.

Earnings:

• 7.4% annual interest as of July 2024 and its paid monthly.
• Monthly payouts are credited directly to your savings.

Opening options:

• Available for individuals and joint holders.
• Guardians can also open accounts for minors or those with special needs.

Advantages:

• Transferable across post offices.
• Nomination feature provides added convenience.

Early withdrawal:

• Withdraw after one year with a 2% deduction if done before three years.
• After three years, the penalty is reduced to 1%.

Duration:

• Fixed period of 5 years, ensuring consistent income.

Additional features:

• Minors aged 10 and above can manage their deposits.
• Multiple accounts allowed, provided the total does not exceed the set limits.

#5 Senior Citizen Savings Scheme (SCSS)

Seeking a secure post-retirement investment? SCSS might be your solution.

• Eligibility:
  • 60 years or older.
  • Retirees aged 55-60 from VRS or superannuation can join within a month of receiving their benefits.
  • Defence retirees from age 50 can also apply.
• Investment details: Starting from ₹1,000 up to ₹30 lakh, in multiples of ₹1,000.
• Interest earnings: 8.2% interest per annum as of July 2024, paid quarterly.
• Tax benefits: Deductions u/s 80C of the ITA on your investments.
• Account features: Hold the account individually or jointly with your spouse. Easily transfer your account between post offices and nominate beneficiaries anytime.
• Maturity and flexibility: It can be extended for an additional three years once it matures in five years. There are some situations in which premature closure is acceptable.

Seniors looking for financial security like SCSS because it provides consistency and consistent returns.

#6 Public provident fund/PPF account

The tool is a government-backed savings scheme good for those looking to save over the long term with significant tax advantages.

• Contribution range: You can invest between ₹500 and ₹1,50,000. Deposits can be made either as a lump sum or spread out over 12 instalments.
• Earnings: 7.1% per annum as of July 2024, compounded yearly. Importantly, the earned interest is exempt from tax.
• Account term: The scheme matures in 15 years. Upon completion, you have the option to extend it in blocks of 5 years, continuing with or without additional contributions.
• Access to funds: Partial withdrawals become available from the 7th year onwards. Additionally, you can secure loans against your balance from the 3rd to the 6th year.
• Tax breaks: Contributions are eligible for deductions u/s 80C, and the interest accrued is tax-free.
• Key features: Only individual accounts can be opened, and joint accounts are not permitted. You can nominate beneficiaries, and transfer the account between post offices if needed.

The PPF can be a prudent option for those aiming to build a stable financial future with guaranteed returns and comprehensive tax benefits.

#7 National Savings Certificates (NSC)

The NSC VIII Issue is another savings scheme from the Indian PO for long-term financial planning.

• Flexible contributions: Begin with ₹1,000 and add in multiples of ₹100. There’s no upper cap accommodating diverse investment sizes.
• Growth: 7.7% annual interest (as of July 2024), compounded yearly and paid out at the end. Your savings will steadily increase.
• Duration: A fixed term of 5 years. Upon completion, you receive the initial deposit plus the accrued returns.
• Tax benefits: Qualified for Section 80C deductions. The returns are also treated as reinvested, offering further tax advantages.
• Variety in holdings: Open individually, for minors, or jointly with up to three adults, either jointly payable or to the survivor.
• Loan facility: The certificate can act as collateral to secure a bank loan, providing financial flexibility.

#8 Kisan Vikas Patra

Kisan Vikas Patra (KVP) is an adaptable savings scheme, an option for those aiming to grow their funds securely.

• Starting amount: You can start with ₹1,000, with options to increase in increments of ₹100. This scheme accommodates both modest and large contributions.
• Growth period: Your initial deposit doubles in 100 months, which is about 8 years and 4 months, offering assured returns.
• Holder types: Open as an individual, for a minor, or jointly with up to three adults. Ensure your savings go to your intended heir with the nomination facility.
• Early access: Certificates can be redeemed after 2.5 years from the issue date, providing financial flexibility if needed.
• Transfer options: Easily switch ownership or move your certificates between post offices for smooth management.
• Purchase points: Available at any post office or authorised bank, making it convenient to start your savings journey.

#9 Sukanya Samriddhi accounts

The Sukanya Samriddhi Yojana (SSY) is a post office scheme for girl child

• Eligibility: Open an account for a girl under 10. Each family can have two accounts for two daughters.
• Contributions: Start with a minimum of ₹250, up to ₹1.5 lakh per year. Deposits can be in multiples of ₹50, either in lump sum or instalments.
• Growth: Earn an annual interest of 8.2% as of July 2024, compounded yearly, ensuring your savings grow significantly.
• Duration and access: Matures in 21 years from the date of opening. Withdraw up to 50% for higher education after she turns 18.
• Tax advantages: Get deductions under Section 80C. Interest earned is also tax-free.
• Flexibility: Transferable between post offices and authorised banks nationwide. It can be closed after she turns 18 for marriage purposes.

Conclusion

Post office schemes cater to a spectrum of needs, providing choices from short-term deposits to long-term growth plans. With perks like tax benefits, assured returns, and flexible terms, these accounts support diverse savings strategies. Assess your objectives and pick the one that aligns with your goals for a secure future.

DISCLAIMER: This article is not meant to be giving financial advice. Please seek a registered financial advisor for any investments.