The Department of Post – India Post – offers nine investment schemes. Thus, post offices across the country offer you nine investment schemes to choose from. Post office saving schemes not only help you grow your savings but also save income tax.
Since the new financial year has just started, you may consider investing in some of them. Three of these nine post office saving schemes are 15-year Public Provident Fund Account (PPF), National Savings Certificates (NSC) and Senior Citizen Savings Scheme (SCSS).
Given below are details of these post office savings schemes – PPF, NSC and SCSS:
15-year Public Provident Fund Account (PPF)
A PPF account can be opened with a minimum of Rs. 100, according to India Post’s website – indiapost.gov.in. A PPF subscriber has to deposit a minimum of Rs. 500 per month in the PPF account, subject to the maximum limit of Rs. 1,50,000.
Features of PPF accounts
The subscriber cannot open a joint account.
The PPF account can be opened by cash/cheque. In case of cheque, the date of realisation of cheque in the government account is treated as the date of opening of account.
A nomination facility is available at the time of opening and also after opening of the account. The account can be transferred from one post office to another.
The subscriber can open another account in the name of a minor but it is subject to the maximum investment limit, based on the total balance in all accounts.
The maturity period of PPF accounts is 15 years but the same can be extended within one year of maturity for a further five years and so on.
The maturity value can be retained without extension and without further deposits also. A premature closure of PPF accounts is not allowed before 15 years.
Withdrawal from PPF accounts is permissible every year from the seventh financial year from the year of opening of account.
A loan facility against PPF accounts is available from the third financial year.
Income tax benefit on PPF accounts
PPF deposits qualify for deduction from income under Section 80C of the Income Tax Act. Interest income earned on PPF accounts is completely tax-free.
Interest rates on PPF accounts:
The current interest rate on PPF accounts is fixed at 7.6 per cent per annum (compounded yearly).
National Savings Certificates (NSC)
NSCs can be purchased from post offices. NSCs have five- and ten-year maturity periods, and can be pledged to banks for availing loans.
Features of NSCs
A single holder type certificate can be purchased by, an adult for self or on behalf of a minor, or by a minor, according to India Post.
Income tax benefits of NSCs
NSC deposits qualify for tax rebate under Section 80C of the I-T Act. The interest accrues annually but is deemed to be reinvested under Section 80C of the I-T Act.
Interest rates on NSCs
NSCs offer an interest rate of 7.6 per cent. The interest rate on NSCs is compounded annually but is payable at maturity. For example, an investment of Rs. 100 grows to Rs. 144.23 after five years.
Senior Citizen Savings Scheme (SCSS)
This investment scheme is meant for people above the age of 60 years. SCSS allows only one deposit in the account in multiples of Rs. 1,000. The maximum deposit in SCSS should not exceed Rs. 15 lakh, according to India Post.
Features of SCSS
An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under Voluntary retirement scheme (VRS) can open an SCSS account. However, the account must be opened within one month of receipt of retirement benefits and the amount should not exceed the amount of retirement benefits.
SCSS investment comes with a maturity period of 5 years.
A depositor may operate more than one account in individual capacity or jointly with spouse.
An SCSS account can be opened by cash for an amount below Rs. 1 lakh. For Rs. 1 lakh and above, investment is allowed through cheque only. In case of cheque, the date of realisation in the government account is treated as the date of opening of account.
A nomination facility is available at the time of opening and also after opening of account. The account can be transferred from one post office to another.
Any number of accounts can be opened in any post office subject to the maximum investment limit by adding balance in all accounts.
Premature closure is allowed after one year on deduction of an amount equal to 1.5 per cent of the deposit. after two years, an amount equal to 1 per cent of the deposit is eligible for premature withdrawal.
After maturity, the account can be extended for further three years within one year of the maturity by giving application in prescribed format. In such cases, the account can be closed at any time after expiry of one year of extension without any deduction.
Income tax benefit on SCSS
TDS (tax deducted at source) is deducted on interest if the interest amount is more than Rs.10,000 per annum. Investment under this scheme qualifies for income tax benefit under Section 80C of the Income Tax Act, 1961.
Interest rates offered on SCSS
SCSS accounts offer a rate of interest of 8.3 per cent per annum, payable from the date of deposit of from March 31/September 30/December 31 of the year in the first instance. Subsequently, the interest is payable on March 31, June 30, September 30 and December 31.