Post Office Savings Schemes: Savings Account Vs Recurring Deposit Vs Fixed Deposit (FD) Vs MIS Vs Sukanya Samriddhi
India Post, the postal system of the country, offers several savings schemes which not only require modest contribution but also offer attractive investment return. Five savings schemes of India Post - savings account, recurring deposit account, fixed deposit account, monthly investment scheme, and sukanya samriddhi account, offer interest rates ranging from 4 per cent to 8.1 per cent. Besides decent annual returns, some of these schemes also offer income tax benefits under Section 80C of the Income Tax Act.
Given below is a comparison of India Post's post office savings account, post office recurring deposit, post office fixed deposit (FD), post office monthly income scheme (MIS), and post office sukanya samriddhi accounts:
Post office savings account
Post office savings account can be opened by cash only, said India Post. Interest earned is tax-free up to Rs 10,000 but beyond that, the interest income is taxable. Savings account fetches an interest rate of 4 per cent per annum, which means the annual return from the India Post's savings account will increase by 4 per cent on a yearly basis. Post office savings account offers an ATM card. Deposits and withdrawals in post office savings accounts can be done through electronic mode also.
Post office recurring deposit (RD)
Post office recurring deposits have tenures up to five years. Post office recurring deposits need you to make payments at regular intervals. Investment can be done with a minimum Rs. 10 per month or any amount in multiples of Rs. 5, stated India Post on its website, indiapost.gov.in. There is no maximum investment limit on the recurring deposit instalment. Post office recurring deposit account can be opened via cash or cheque. Subsequent deposits can be made up to 15th day of next month if the account is opened up to 15th of a calendar month, and up to the last working day of next month, if it is opened between 16th day and last working day of a calendar month.
Post office recurring deposit accounts offer a quarterly-compounded interest rate of 6.9 per cent per annum. A recurring deposit account in which a subscriber contributes Rs. 10 every month fetches a return of Rs. 717.43 on maturity.
One withdrawal up to 50 per cent of the balance is allowed after one year. It may be repaid in one lump sum along with interest at the prescribed rate.
Post office monthly investment scheme (MIS)
While post office recurring deposits require payments at regular intervals, the return on post office monthly income scheme comes at regular periods, India Post said.
The minimum amount required for opening a post office monthly income scheme account should be in multiples of Rs. 1,500. It can be increased thereafter. The maximum investment limit is Rs. 4.5 lakh in single account and Rs. 9 lakh in joint account. An individual can invest maximum Rs. 4.5 lakh in MIS (including his share in joint accounts).
Deposits in post office monthly income scheme account fetch an interest rate of 7.3 per cent per annum payable monthly.
The maturity period of a post office monthly investment scheme is five years. Interest can be drawn through auto credit into savings account standing at the same post office.
| Post office scheme | Annual return (interest rate per annum) | Minimum amount required for opening | Maximum amount allowed |
|---|---|---|---|
| Savings account | 4% | Rs 20 | - |
| Recurring deposit account (RD) | 6.90% | Rs 10 per month | No limit |
| Time deposit account (TD) | 6.6-7.4% | Rs 200 | No limit |
| Monthly Income Scheme (MIS) account | 7.30% | Rs 1,500 | Rs 4.5 lakh |
| Sukanya Samriddhi Account | 8.1% | Rs 250 | Rs 1.5 lakh per financial year |
| (Source: indiapost.gov.in) | |||
Post office fixed deposit or term deposit account
The minimum investment that you require to open a fixed deposit with post office is Rs. 200, stated India Post. The interest is payable annually but calculated quarterly. The account can be transferred from one post office to another.
Interest rate on one-year post office fixed deposit is 6.6 per cent, on a two-year post office fixed deposit is 6.7 per cent, on a three-year post office fixed deposit is 6.7 per cent, and on a five-year post office fixed deposit is 7.4 per cent. Investment under five years fixed deposit qualifies for benefit under Section 80C of the Income Tax Act, 1961.
Sukanya Samriddhi Scheme
This is a government-run scheme for the girl child. This scheme requires a minimum investment of Rs 250 per year, as stated by the government recently. Earlier, the minimum investment was Rs 1,000 per year. A total of Rs. 1,50,000 is the investment limit in a financial year. Subsequent deposits should be made in multiple of Rs. 100. Deposits can be made in lump-sum amount. There is no limit on the number of deposits either in a month or in a financial year.
The account can be opened up to age of 10 years only from the date of birth. A legal guardian/natural guardian can open the account in the name of girl child.
A guardian can open only one account in the name of one girl child and maximum two accounts in the name of two different girl children.
Sukanya Samriddhi Schemes offer an interest rate of 8.1 per cent per annum. The investment is calculated and compounded on an annual basis.
