Indian Income Tax
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Post Office Savings Schemes In India

The main financial services offered by the Department of Posts are the Post Office Savings Bank. It is the largest and oldest banking service institution in the country. The Department of Posts operates the Post Office Savings Scheme function on behalf of the Ministry of Finance, Government of India. Under this scheme, more than 20.50 crores savings account are operated. These accounts are operated through more than 1,54,000 post offices across the country.

The Post offices provide a number of savings schemes like the Savings Account Schemes, Recurring Deposit Schemes, Time Deposit Schemes, Public Provident Fund Schemes, Monthly Income Schemes, National Savings Certificates, Kisan Vikas Patras, and Senior Citizensí Savings Scheme. A brief of the various schemes is as follows:

Scheme Interest Rates Tenure Investment Denominations and limits Salient Features Tax rebate
Post Office Savings Account 3.5% p.a. On individual and joint account No specific or fix tenure Min: Rs. 50 Max: Rs. 1 lakh for individual and 2 lakhs for joint account Cheque facility available Interest is tax-free u/s 80L
5-Year Post Office Recurring Deposit Account 7.5% compounded quarterly 5 years. Can be renewed for another 5 years Min: Rs. 10 per month or multiples of Rs. 5 Max: No limit One withdrawal up to 50% of the balance is allowed after one year. Full maturity value allowed on R.D. 6 & 12 months advance deposits earn rebate. No tax rebate
Post Office Time Deposit Account 6.25% 1 year Min: Rs. 200 and its multiple thereof Max: No limit Long-term accounts could be closed after 1 year for discounted interest. Accounts could be closed after 6 months but before a year for no interest. Interest is calculated quarterly but payable yearly. Investment qualifies for deduction u/s 80C. Interest is tax-free u/s 80L
6.50% 2 years
7.25% 3 years
7.50% 5 years
Post Office Monthly Income Account 8% p.a. 6 years Min: Rs. 1500 per month or multiples of it.Max: Rs. 4.5 lakhs for individual account and Rs. 9 lakhs for joint account Account if closed after 1 year but before 3 years will suffer a deduction of 2% of the deposit. Account if closed after 3 years will suffer a deduction of 1% of the deposit. On maturity, bonus of 5% on principal amount is admissible Interest is tax-free u/s 80L
15-year Public Provident Fund Account 8% p.a. compounded yearly 15 years tenure Min: Rs. 500 in 1 year Max: Rs. 70000 in 1 year Deposits can be made in lump-sum or 12 installments Withdrawal can be made every year after the 7th financial year. From the 3rd financial year, loan can be availed against PPF. No attachment under court decree order. Investment qualifies for deduction u/s 80C. Interest is tax-free u/s 80L
Kisan Vikas Patra 8.4% compounded yearly. Money doubles in 8 years and 7 months --- No limits. Investment denominations available are of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000, Rs. 10,000, in all Post Offices and Rs. 50,000 in all Head Post Offices. A single holder certificate can be purchased by an adult. A certificate can also be purchased jointly by two adults. No tax benefits
National Savings Certificate (VIII issue) 8% p.a. compounded half-yearly but payable after maturity 6 years Min: Rs. 100. Also available in denominations of Rs. 100/-, 500/-, 1000/-, 5000 & Rs. 10,000/-. Max: no limit A single holder certificate can be purchased by an adult. Investment as well as the interest deemed to be re-invested qualifies for deduction u/s 80C.
Senior Citizensí Savings Scheme 9% p.a. 5 years Only 1 deposit allowed in multiple of Rs. 1000. Max is Rs. 15 lakhs Age should be above 60 years or 55 years above if retired under superannuation. Account if closed after 1 year will suffer a deduction of 1.5% interest and after 2 years will suffer a deduction of 1% interest. TDS is made on interest if it exceeds Rs. 10000 p.a. Investment qualifies for deduction u/s 80C.

The silent features of the current schemes are given below:

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