To cultivate the habits of savings among customers Post offices offers various savings schemes to their customers, i.e. Post office Savings Account, National Savings Recurring Deposit Account, National Savings Monthly Income Accounts, Senior Citizen Savings Schemes Account, Public Provident Fund Account, Sukanya Samriddhi Account, National Savings Certificates, Kisan Vikas Patra. Some of these schemes are beneficial not only from the saving points of view but also from the taxation point of views. Let us compare the various schemes offered by the Post office and tax implications on the same.

Post Office Savings Schemes

Scheme Who can open Interest Rate Periodicity of Interest Minimum amount for opening of account Minimum Deposit and Maximum Deposit
Post Office Savings Account (SB) (i) a single adult

(ii) two adults only (Joint A* or Joint B**)

(iii) a guardian on behalf of the minor

(iv) a guardian on behalf of a person of unsound mind ​

(iv) a minor above 10 years in his own name

4% Per annum Yearly, credited at the end of financial Year Rs. 500 Frequency of deposit- Any number of Time.

Minimum Subsequent Deposit- Rs.10

Maximum Deposit- No Limit

5- Years Post Office Recurring Deposit Account (RD) (i) a single adult

(ii) Joint Account (up to 3 adults) (Joint A* or Joint B**)

(iii) a guardian on behalf of a minor

(iv) a guardian on behalf of a person of unsound mind

(iv) a minor above 10 years in his own name.

5.8% per annum

(from 01.04.2020)

Compounded quarterly Rs.100 Frequency of deposit- Monthly

Minimum Deposit- Rs.100

Maximum Deposit- No limit

Deposit above the minimum is in the multiples of Rs.10.

National Savings Time Deposits Accounts (TD) i) a single adult

(ii) Joint Account (up to 3 adults) (Joint A* or Joint B**)

(iii) a guardian on behalf of minor

(iv) a guardian on behalf of person of unsound mind

(v) a minor above 10 years in his own name.

For

1 Year A / c- 5.5%

2 Year A / c- 5.5%

3 Year A / c- 5.5%

5 5ear A / c- 6.7%

(from 01.04.2020)

Calculated quarterly, Payable yearly Rs. 1000 Frequency of deposit- One time

Minimum Deposit- Rs.1000

Maximum Deposit- No Limit

Deposit above the minimum is in the multiples of Rs.100

National Savings Monthly Income Account (MIS) i) a single adult

(ii) Joint Account (up to 3 adults) (Joint A* or Joint B**)

(iii) a guardian on behalf of minor / person of unsound mind

(iv) a minor above 10 years in his own name.

6​.6​ % per annum

(from 01.04.2020)

Payable Monthly Rs. 1000 Frequency of deposit- One time  Minimum Deposit-Rs.1000

Maximum Deposit- 4.5 lakh in a single account 9 Lakh in a joint account

An individual can invest a maximum 4.5 lakh (including his share in joint account) in all MIS accounts.

Deposit above the minimum is in the multiples of Rs.1000

Public Provident Fund (PPF) (i) a single indian resident adult.

(ii) a guardian on behalf of minor / person of unsound mind

7.1% per annum

(from 01.04.2020)

Compounded yearly Rs.500 Frequency of deposit- At least once in a financial year

Minimum Deposits- Rs. 500 in a Financial Year

Maximum Deposit- Rs. 150,000 in a financial Year

Deposits can be made in Instalments or a lump sum amount

Deposit above the minimum is in the multiples of Rs.50.

Senior Citizen Savings Scheme (SCSS) i) An individual above 60 years of age.

(ii) Retired Civilian Employees above 55 years of age and below 60 years of age, subject to the condition that investment to be made within 1 month of receipt of retirement benefits.

(iii) Retired Defence Employees above 50 years of age and below 60 years of age, subject to the condition that investment to be made within 1 month of receipt of retirement benefits.

(iv) Account can be opened as individual capacity or jointly with spouse only.

7.4 ​% per annum Payable Quarterly Rs.1000 Frequency of deposit- one time

Minimum Deposit -1000

Maximum Deposit- 15,00,000

(covering all SCSS accounts)

Deposit above the minimum is in the multiples of Rs.1000

Sukanya Samriddhi Accounts (SSA) Guardian, in the name of the girl child below the age of 10 years. 7.6% per annum (from 01.04.2020) Compounded Annually Rs. 250 Frequency of deposit- At least once in a financial year

Minimum Deposit- 250 in a financial year.

Maximum Deposit- 150,000 in a financial year

Deposit above the minimum is in the multiples of Rs. 50.

5 Years National Savings Certificate (VIII Issue) (NSC) (i) A single adult

(ii) Joint Account (up to 3 adults) (Joint A* or Joint B**)

(iii) a guardian on behalf of a minor or on behalf of a person of unsound mind

(iv) a minor above 10 years in his own name.

6.8% per annum (from 01.04.2020) Compounded Annually Rs.1000 Frequency of deposit- One time

Minimum Deposit- Rs.1000

Maximum Deposit- No Limit

Deposit above the minimum is in the multiples of Rs.100

Kisan Vikas Patra (KVP)

 

(i) a single adult

(ii) Joint Account (up to 3 adults) (Joint A* or Joint B**)

(iii) a guardian on behalf of a minor or on behalf of a person of unsound mind

(iv) a minor above 10 years in his own name.

6.9% per annum (from 01.04.2020) Compounded Annually

(Amount Invested doubles in 124 months)

Rs.1000 Frequency of deposit- one time

Minimum

Deposit- Rs.1000

Maximum Deposit- No Limit

Deposit above the minimum is in the multiples of Rs.100

Scheme Tax Implications In case of Death of Account holder Premature Closure Additional Points
Deposits Interest Earned
Post Office Savings Account (SB) Not qualified for deduction. Resident Senior Citizen- Interest is tax-free under section 80TTB for up to Rs. 50,000 (covering all type of interest earned from deposits made with post office, Banks, Cooperative Society)

Others- up to 10,000 Under Section 80TTA (covering all type of saving account interest earned from the Post office, Banks, Cooperative Society)

 

The balance in the account shall be payable to the nominee or legal heir(s)

On the demise of a Joint holder, the survivor will be the sole holder. If the survivor already has a single account in his / her name, Joint account have to be closed.

 

It Can be closed at any time 1.can open only one account per individual

2. Nomination is compulsory at the time of opening of the account.

3. Additional Facilities available – Cheque Book, ATM card, Net banking, Mobile Banking.

4. If no deposit / withdrawal occurs in an account during continuous three financial years, the account shall be treated as silent / dormant.

5- Years Post Office Recurring Deposit Account (RD) Not qualified for deduction For Resident Senior Citizen- Interest is tax-free under section 80TTB for up to Rs. 50,000 (covering all type of interest earned from deposits made with post office, Banks, Cooperative Society).

For Others-Taxable

nominee / legal heirs can submit a claim to get the eligible balance of such RD account and can continue RD account till maturity. It can be closed after 3 years. 1. Any number of accounts can be opened.

2. Depositor can make advance deposit up to 5 Years.

3. Depositor can avail loan facility subject to prescribed condition.

4. Maturity- 5years from the date of opening

5. RD account can be extended for a further period of 5 years.

National Savings Time Deposits Accounts (TD) 5 Year TD is eligible for deduction u/s 80C. For Resident Senior Citizen- Interest is tax-free under section 80TTB for up to Rs. 50,000 (covering all type of interest earned from deposits made with post office, Banks, Cooperative Society) .

For Others-Taxable

the deposit in the account shall be payable to the nominee or legal heir(s)

On the death of one or two of the account holders in a joint account, the surviving account holder or holders, if any, shall be treated as the owner or owners of the account and such account.

It can be closed after 6 months. Pre-closure fee at prescribed rates are applicable. 1. Any number of accounts can be opened.

2. Maturity -1 Year, 2 Year, 3Year, 5 year as the case may be.

3. Term Deposit account can be extended after maturity

4. TD account can be closed prematurely.

5.It can be pledged or transferred as security.

National Savings Monthly Income Account (MIS) Not qualified for deduction Resident Senior Citizen- Interest is tax-free under section 80TTB for up to Rs. 50,000 (covering all type of interest earned from deposits made with post office, Banks, Cooperative Society)

For Others- Taxable

the amount standing in the account shall be payable to the nominee or legal heir(s) . It Can be closed after 1 year. Pre-closure fee at prescribed rates are applicable. 1. Any number of accounts can be opened.

2. Maturity- 5 Years from the date of opening.

3. Premature closure is permissible

Public Provident Fund (PPF) Qualified for deduction under Section 80c Tax- free the account shall be closed and nominee or legal heir(s) shall not be allowed to continue deposits in the account. After 5 years only in case of Severe Illness, Higher Education and NRI status. 1. Only one account can be opened all across the country either in Post Office or any Bank.

2. Maximum limit of Rs. 1.50 lakh shall be inclusive of the deposits made in his / her own account and in the account opened on behalf of minor.

3. Loan facility can be availed after expiry of one year.

4. A subscriber can take one withdrawal during a financial year after five years excluding the year of account opening.

5. Account will be matured after 15 F.Y. years excluding FY of account opening

6. Account holder may extend the accounts even after fifteen years for a further period of 5 years

Senior Citizen Savings Scheme (SCSS) Qualified for deduction u/s 80C.

 

For Resident Senior Citizen- Interest is tax-free under section 80TTB for up to Rs. 50,000 (covering all type of interest earned from deposits made with post office, Banks, Cooperative Society)

 

 

 

If spouse is a joint holder or a sole nominee, account can be continued till maturity if spouse is eligible to open SCSS account and not have another SCSS Account.

In other cases – the account shall be closed and the deposit refunded to the nominee or the legal heir

It can be closed at any time. Pre-closure fee at prescribed rate are applicable. 1. Any number of accounts can be opened.

2.The whole amount of deposit in a joint account shall be attributable to the first account holder only

3.Maturity- 5 Years from the date of opening.

4. Premature closure is permissible.

5. Account holder may extend the accounts after maturity for further period of 3 years.

Sukanya Samriddhi Accounts (SSA) Qualified for Deduction u/s 80C.

 

Tax- free The eligible balance in the account shall be payable to Nominee

 

After 5 years only in case of death of account holder or guardian or severe illness to the account holder. 1.Only one account can be opened in the name of a girl child.

2. Opened for a maximum two girl Child. More than two accounts can be opened in case of twins / triplets girls.

3.Withdrawl and premature closure are allowed subject to prescribed conditions.

4. it has a tenure of 21 years or until the girl child marries after the age of 18.

5 Years National Savings Certificate (VIII Issue) (NSC) Qualified for Deduction u/s 80C. Interest earned is added back to the Initial Investment hence eligible for deduction u/s 80C. Only Final year Interest when NSC matures is taxable. Single Account- the eligible balance in the account shall be payable to Nominee Joint Account- The surviving account holder or holders, if any, shall be treated as the owner or owners of the account ​Premature closure is not permitted (except in case of death and forfeiture) . 1. The deposit shall mature on completion of five years from the date of the deposit

2. Any number of accounts can be opened under the scheme.

3. NSC may be pledged or can be transferred as a security

4. It may be prematurely closed any time before maturity, subject to prescribed condition.

5. NSC can be transferred from one person to another subject to the prescribed condition

Kisan Vikas Patra (KVP)

 

Not qualified for deduction Resident Senior Citizen- Interest is tax-free under section 80TTB for up to Rs. 50,000 (covering all type of interest earned from deposits made with post office, Banks, Cooperative Society)

For Others- Interest is taxable on an accrual basis.

Single Account- the deposit shall be payable to the nominee / legal heirs.

Joint Account – the surviving account holder or holders, if any, shall be treated as the owner or owners of the account.

​After two years six months 1.Any number of accounts can be opened under the scheme.

2. KVP may be pledged or transferred as a security

3.It may be prematurely closed any time before maturity, subject to the prescribed condition.

4. KVP can be transferred from one person to another subject to the prescribed condition.

5.Maturity period prescribed by the Ministry of Finance from time to time is applicable on the date of deposit.

*Joint A-   This account may be opened jointly in the names of up to three adults payable to all the holders jointly or to the survivor or survivors.

**Joint B-  This Account may be opened jointly in the name of up to three adults payable to any of the account holders or to the survivor or survivors.

Source- https: / / www.indiapost.gov.in / Financial / pages / content / post-office-saving-schemes.aspx

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Qualification: CA in Practice
Company: S CHAUDHARI AND COMPANY
Location: Ratlam, Madhya Pradesh, India
Member Since: 20 Sep 2020 | Total Posts: 3

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