Post Office Saving Schemes: Interest Rates, Minimum Deposit, Premature Closure Rules
India Post or Department of Posts, which runs postal services in the country, offers nine types of small saving schemes. These include regular savings account, 5-year recurring deposit, time deposit (TD) account, Monthly Income Scheme (MIS) account, Senior Citizen Savings Scheme (SCSS), 15-year Public Provident Fund Account (PPF), National Savings Certificates (NSC), Kisan Vikas Patra (KVP), and Sukanya Samriddhi accounts. Interest rates on these saving schemes move in line with government's interest rates on small savings schemes, which are reviewed on a quarterly basis.
Given below are key things to know about the 9 post office saving schemes:
1. For the current quarter ending June 30, 2019, investment in post office small savings schemes fetches returns to the tune of 4-8.7 per cent, according to a Ministry of Finance statement dated March 29, 2019. Here are the interest rates and compounding frequency of all types of post office saving schemes:
| Post office small saving scheme | Rate of interest for quarter ending March 31, 2019 | Compounding frequency |
|---|---|---|
| Savings Deposit | 4.00% | Annually |
| 1-Year Time Deposit | 7.00% | Quarterly |
| 2-Year Time Deposit | 7.00% | Quarterly |
| 3-Year Time Deposit | 7.00% | Quarterly |
| 5-Year Time Deposit | 7.80% | Quarterly |
| 5-Year Recurring Deposit | 7.30% | Quarterly |
| 5-Year Senior Citizen Savings Scheme | 8.70% | Quarterly and paid |
| 5-Year Monthly Income Scheme | 7.70% | Monthly and paid |
| 5-Year National Savings Certificate | 8.00% | Annually |
| Public Provident Fund Scheme | 8.00% | Annually |
| Kisan Vikas Patra | 7.7% (will mature in 112 months) | Annually |
| Sukanya Samriddhi Account Scheme | 8.50% | Annually |
(As mentioned on India Post's official website)
2. India Post has set a certain sum of money as the minimum deposit in case of these small saving accounts. Here are the minimum investment required in different types of post office saving accounts:
| Account name | Minimum amount required to open account |
|---|---|
| Savings account (Cheque account) | Rs 20 |
| Savings account (non Cheque account) | Rs 20 |
| Monthly Income Scheme (MIS) | Rs 1,500 |
| Fixed Deposit (FD) Account | Rs 200 |
| Public Provident Fund (PPF) | Rs 500 |
| Senior Citizen Savings Scheme (SCSS) | Rs 1,000 |
(As mentioned on India Post's official website)
3. With some of its saving schemes, India Post offers the facility of premature closure or encashment. Here are the permissible limits set by post office for premature closure/encashment of accounts:
| Different Savings Accounts | |
|---|---|
| NSCs (VIII Issue) | Maturity period 5 years (for certificates issued on or after .01.11.2011). No premature encasement possible. |
| SB | Can be closed at any time |
| RD | Premature closure permissible after 3 years - only SB rate is permissible |
| TD | Premature closure permissible after 6 months |
| MIS | Premature closure permissible after 1 year |
| Senior Citizen | Premature closure after 1 year |
4. Post office offers an ATM-cum-debit card facility with its regular savings account. A certain number of transactions are offered free of cost at ATMs with a specific transaction limit. Customers are charged for transactions at ATMs over and above these permitted number of free transactions. Here are the transaction limits and related charges levied by post office on its ATM cards:
| India Post (post office) ATM transaction limits/charges | |
|---|---|
| Daily ATM cash withdrawal limit | Rs 25,000 |
| Cash withdrawal limit per transaction | Rs 10,000 |
| Charges for transactions done at DOP ATMs | Free (Both Financial & Non Financial) with a limit of 5 Financial transactions per day |
| Permissible free transactions at other Bank ATMs (per month) |
Metro Cities - 3 free transactions (Both Financial & Non Financial) Non Metro Cities - 5 free transactions (Both Financial & Non Financial) |
| Charges after exceeding permissible free transaction limit at other Bank ATMs | Financial & Non Financial Transactions - Rs 20 + Applicable GST |
(As mentioned on India Post's official website)
5. Some of the post office saving schemes qualify for income tax benefits. Using these products, an investor can claim a deduction up to Rs. 1.5 lakh in a financial year from taxable income under Section 80C of the Income Tax Act.
