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Post Office Saving Schemes: From PPF to SCSS, 5 best post office schemes you can bet on for better return

The Financial Express logo The Financial Express 01-04-2019 Priyadarshini Maji
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India Post offers nine small savings investment schemes, run under the Ministry of Communications. According to its website, indiapost.gov.in, they offer multiple savings schemes which include Post Office Monthly Income Scheme Account, 15-year Public Provident Fund Account, Sukanya Samriddhi Account, 5-Year Post Office Recurring Deposit Account, and Senior Citizen Savings Scheme. These schemes are popular as an investment option among customers in India because most of these schemes can be started with minimal investment amounts and offer high interest to the customers. The features and benefits of these schemes, however, vary and depending on one's need, one should opt for these schemes. For instance, PPF comes with a maturity period of 15 years, whereas Post Office Recurring Deposit is a 5-year scheme. PPF also offers tax deduction u/s 80C. Every quarter the interest rates are decided by the government.

If you are planning to invest in post office schemes, here are the 5 best options for you: 

  • Post Office Monthly Income Scheme Account (MIS)

Monthly Income Scheme Account comes with a maximum investment limit of Rs 4.5 lakh in a single account, and requires investment in multiples of Rs 1,500. You can also open a joint account with a maximum investment limit of Rs 9 lakh. The interest rate offered is 7.3 percent per annum, payable monthly. You can also withdraw the deposited amount before it matures, but only after one year. If you withdraw before three years, you will be charged a 2 percent discount off the deposit and after 3 years a discount of 1 percent of the deposit is charged. On maturity, a bonus of 5 percent on the principal amount for accounts opened on or after 8.12.07 and up to 30.11.2011 is given. Also, no bonus is payable on the deposits made on or after 1.12.2011. 

  • 15 year Public Provident Fund Account (PPF)

A minimum of Rs 500 and a maximum of Rs 1.5 lakh needs to be deposited by an individual in a financial year. Either in 12 installments or in lump-sum deposits can be made. Though the maturity period is 15 years, the same can be extended within one year of maturity for a further five years and so on. However, the account does not allow premature closure before 15 years. You can also claim a tax deduction from income under Section 80C of the IT Act, on the deposits. Interest rate offered on the PPF account is 8 per cent per annum and is completely tax-free. 

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  • Sukanya Samriddhi Account

Any legal guardian or parents can open this account for their girl child. In a financial year, this account requires a minimum deposit of Rs. 1,000 and a maximum of Rs. 1.5 lakh. Deposits can also be made in lump-sum, and in multiples of Rs. 100. Maximum up to 50 percent partial withdrawal can be made of the balance standing at the end of the preceding financial year, only after the account holder's attaining age of 18 years, and the account can be closed after the account holder reaches 21 years. The interest rate offered by Sukanya Samriddhi Accounts is 8.5 percent per annum, calculated on a yearly basis and compounded yearly. 

  • 5-Year Post Office Recurring Deposit Account (RD)

Any amount in multiples of Rs 5 or a minimum of Rs 10 per month needs to be deposited to open an RD account. There is no maximum limit and on maturity, a Rs 10 account fetches Rs 717.43. On year to year basis, an account can be continued for another five years. The interest rate offered is 7.3 percent per annum. If an account is opened up to 15th of a calendar month, a subsequent deposit can be made up to the 15th day of next month and if an account is opened between the 16th day and last working day of a calendar month, up to last working day of next month deposits can e made. A default fee is charged for each default if a subsequent deposit is not made up to the prescribed day. Default fee of Rs 0.05 for every Rs 5 is charged. The account is discontinued after 4 regular defaults and can be revived within two months. However, if it is not revived within this period, no further deposit can be made. 

  • Senior Citizen Savings Scheme (SCSS)

Any individual of the age of 55 years or more but less than 60 years who has retired can open an SCSS account. An individual on superannuation or under VRS can also open an account. However, the account can be opened within one month of receipt of retirement benefits and the amount should not exceed the number of retirement benefits. Deposits can be made in multiples of Rs. 1,000 and up to Rs. 15 lakh. The maturity period is set at five years. Premature closure can be made after 1 year on deduction of an amount equivalent to 1.5 percent of the deposit, and after 2 years, on deduction of 1 percent of the deposit. The interest rate offered is 8.7 percent per annum, payable from the date of deposit of March 31/ September 30/ December 31 in the first instance, after which interest will be payable on March 31, June 30, September 30 and December 31.

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