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What is a Post Office Scheme?
A Post Office Scheme encompasses various investment and savings opportunities provided by a nation’s postal service. These schemes are designed to provide secure and reliable investment opportunities for individuals who prefer a conservative approach to financial planning. Post Office Schemes stand out for their convenience, being readily available at neighborhood post offices, thus ensuring broad accessibility to a vast demographic. These schemes offer attractive interest rates and are backed by the government, providing a sense of security to investors. Post Office Schemes offer various avenues for individuals to save and invest their money, backed by the government. These include savings accounts, fixed deposits, recurring deposits, National Savings Certificates (NSC), Public Provident Fund (PPF), and Kisan Vikas Patra (KVP). They provide a reliable means for people to grow their savings while benefiting from government-supported investment opportunities.
Different types of Post Office Schemes
Investors have access to a variety of Post Office Schemes, each offering distinct benefits. Among the widely favored options are:
- Post Office Savings Account: This account, provided by the post office, serves as a fundamental savings option allowing individuals to both deposit and withdraw money according to their needs.
- Post Office Time Deposit Account: Also known as fixed deposits, these accounts offer a fixed interest rate for a specific period, ranging from 1 year to 5 years. The interest is paid out annually but compounded quarterly.
- Recurring Deposit Account: Under this plan, people can contribute a fixed amount every month for a set duration, usually spanning from 5 to 10 years. Once the term concludes, they receive the total sum saved along with accrued interest.
- National Savings Certificates (NSC): NSC is a fixed-income investment option with a fixed interest rate and a maturity period of 5 years. It provides tax advantages as per Section 80C of the Income Tax Act.
- Public Provident Fund (PPF): PPF is a long-term savings scheme with a maturity period of 15 years, which can be extended in blocks of 5 years. It offers attractive interest rates and tax benefits.
- Kisan Vikas Patra (KVP): KVP is a savings scheme that doubles the investment amount in a fixed period, typically 124 months (10 years). It caters to those seeking a durable investment opportunity.
- Senior Citizens Savings Scheme (SCSS): This scheme is exclusively for senior citizens and offers higher interest rates than regular savings accounts. The maturity period is 5 years, extendable by an additional 3 years.
- Sukanya Samriddhi Yojana (SSY): The Sukanya Samriddhi Yojana (SSY) is a specialized savings plan designed to enhance the welfare of the girl child. This scheme provides an attractive interest rate along with tax advantages. It matures either after 21 years or upon the marriage of the girl child, whichever comes first.
How can you open a post office Scheme?
To initiate a Post Office Scheme, you can adhere to the following basic procedure:
- Visit the Nearest Post Office: Find the closest post office in your vicinity that offers Post Office Schemes.
- Collect the Application Form: Request the application form for the specific Post Office Scheme you are interested in. The post office staff will provide you with the necessary forms and guide you through the process.
- Fill in the Form: Complete the application form diligently, ensuring all information provided is precise and comprehensive. Include essential personal details like your name, address, contact information, and any other specifics required for the particular program or scheme.
- Attach Required Documents: Attach the necessary documents as mentioned in the application form. This may include identity proof, address proof, photograph, and any other documents required for KYC (Know Your Customer) compliance.
- Submit the Application: Please hand in the completed application form alongside all necessary documents at the post office counter. Once received, the post office personnel will thoroughly examine the information provided and proceed to approve your application.
- Make the Initial Deposit: Different schemes may require an initial deposit, so it’s important to be prepared with the necessary funds when you submit your application.
- Obtain Acknowledgement Receipt: After you’ve completed the application process and submitted the required deposit, you’ll be given an acknowledgment receipt. It’s important to store this receipt securely for any future needs.
- Scheme Activation: Upon submission, your application will undergo processing at the post office, followed by the activation of your Post Office Scheme account. Subsequently, you will receive all pertinent documents such as the account details, passbook, or any other relevant paperwork related to the scheme.
How to withdraw early from Post Office Schemes?
To opt for an early withdrawal from Post Office Schemes, here are the basic steps you can take:
- Visit the Post Office: Go to the post office where you have the Post Office Scheme account.
- Obtain the Withdrawal Form: Request the withdrawal form from the post office staff. They’ll furnish you with the required form and assist you step by step throughout the procedure.
- Fill in the Form: Complete the withdrawal form by entering precise information. Include personal details, account information, and the desired withdrawal amount.
- Attach Required Documents: Please ensure all necessary documents, such as identification proof, passbook, and any additional papers requested by the post office, are attached along with the withdrawal form.
- Submit the Form: Submit the filled-in withdrawal form along with the necessary documents to the post office counter. The post office staff will verify the details and accept your withdrawal request.
- Provide Signature: Sign the withdrawal form and any other relevant documents, as required.
- Receive the Withdrawal Amount: Once your withdrawal request is processed, the post office will provide you with the withdrawal amount in cash or through a cheque, depending on the specific scheme and withdrawal method.
- Update Passbook or Receipt: Make sure your passbook or receipt gets updated after your withdrawal transaction. Post office personnel will stamp or update your passbook to show the withdrawal.
It’s crucial to understand that withdrawing funds prematurely from Post Office Schemes might incur penalties, adjustments in interest rates, or specific terms and conditions, all contingent on the scheme type and how long the investment has been held.
What is Post Office Savings Account?
A Post Office Savings Account, provided by the Indian Postal Department, serves as a fundamental savings option. It offers a secure and hassle-free avenue for people to safeguard and handle their finances. Starting one involves straightforward procedures and demands only essential paperwork.
Key features of a Post Office Savings Account include:
- Accessibility: Account holders have multiple avenues to retrieve their funds, encompassing in-person transactions at post offices, ATM withdrawals (if applicable), and electronic transfers of funds.
- Minimum Balance: The Post Office Savings Account sets a modest minimum balance threshold, ensuring accessibility to people across various income brackets without redundancy.
- Interest Rate: The interest rate for the account is set by the government to be competitive. It’s calculated every quarter and added to the account once a year.
- Nomination Facility: Account holders have the option to designate a beneficiary who will receive the funds in the event of the account holder’s death.
- Joint Account: People have the option to establish a joint account alongside one or multiple individuals, catering to both familial ties and business associations.
- Passbook Facility: Account holders receive a passbook that meticulously documents every transaction, serving as irrefutable evidence of their account’s activity.
- Tax Benefits: Interest earned from a Post Office Savings Account qualifies for tax exemption within a specified threshold as per Section 80TTA of the Income Tax Act.
The Post Office Savings Account remains a favored option for those seeking a reliable and conventional way to save money, benefiting from the assurance of security while enjoying the convenience of accessing services through the vast network of post offices nationwide.
Premature Closure or Early withdrawal from Post Office Savings Account
Premature closure or early withdrawal from a Post Office Savings Account is allowed under certain circumstances. Learn the steps to commence an early withdrawal or premature closure of your Post Office Savings Account:
- Visit the Post Office: Go to the Post Office branch where you hold the Savings Account. Inform the staff about your intention to make a premature closure or early withdrawal.
- Obtain the Closure Form: Ask the Post Office staff for the form needed to close your account early. They’ll supply the form and guide you through the steps.
- Fill in the Form: Please fill out the closure form thoroughly and ensure all details are correct. Provide your personal information, Savings Account number, and the reason for early withdrawal.
- Submit the Form: Please hand in the completed form along with any necessary documents to the Post Office personnel. They’ll review the information and proceed with your request accordingly.
- Pay the Applicable Charges: Closing a Post Office Savings Account earlier than expected may result in incurring charges or penalties. These fees and regulations can differ based on how long the account has been active. Any applicable charges will be subtracted from the remaining balance in the account.
- Receive the Withdrawal Amount: Upon deduction of the relevant fees, the Post Office will furnish you with the withdrawn sum. This sum represents the balance remaining in your Savings Account post the deduction of charges.
- Update Account Status: The Savings Account will be flagged as prematurely closed by the Post Office, and the account records will be adjusted accordingly.
Premature Closure or Early withdrawal from Post Office Recurring Deposit Account
Premature closure or early withdrawal from a Post Office Recurring Deposit (RD) account is allowed under certain conditions. Here’s the process for withdrawing early from a Post Office RD account:
- Visit the Post Office Branch: Visit the Post Office branch where you hold the RD account. Approach the counter and inform them about your intention to make a premature closure or early withdrawal.
- Obtain the Premature Closure Form: Ask the Post Office personnel for the premature closure form. They’ll furnish you with the requisite document and assist you in navigating the procedure.
- Fill in the Form: Please ensure all fields in the premature closure form are filled accurately. Include personal details, your RD account number, and specify the reason for early withdrawal. Avoid repetition when providing information.
- Submit the Form: Submit the filled-in premature closure form along with any required documents to the Post Office staff. They’ll review the information provided and proceed with your request accordingly.
- Calculate the Penalty: Closing a Post Office RD account before its maturity date results in penalty charges. The penalty amount and regulations differ based on how long the account has been active. These charges are subtracted from the total deposit amount.
- Receive the Withdrawal Amount: Upon subtraction of penalty charges, the Post Office will furnish you with the withdrawal sum, which will inevitably be less than the initially deposited total owing to the penalty deduction.
- Update Account Status: The Post Office will designate your RD account as closed ahead of schedule and will make corresponding updates to the account records.
Premature Closure or Early withdrawal from Post Office Monthly Income Scheme
Withdrawal before the maturity of the Post Office Monthly Income Scheme (MIS) is permissible given certain conditions are met. Here’s the process for withdrawing early from the Post Office MIS:
- Visit the Post Office: Go to the post office branch where you hold the MIS account.
- Obtain the Premature Closure Form: Request the premature closure form from the post office staff. You’ll receive the required form and receive help throughout the process.
- Fill in the Form: Complete the premature closure form with accurate information. Provide your personal details, MIS account number, and the reason for early withdrawal.
- Submit the Form: Submit the filled-in premature closure form to the post office counter along with any required documents. The personnel at the post office will review the information provided and proceed with your request accordingly.
- Calculate the Penalty: Closing a Post Office Monthly Income Scheme (MIS) before its maturity date results in a penalty, the amount of which is determined by how long the account has been active. The penalty amount is deducted from the total invested amount.
- Receive the Withdrawal Amount: Following the deduction of the relevant penalty, the withdrawal amount will be provided by the post office. This sum will be less than the total invested amount owing to the penalty being subtracted.
- Update Account Status: The post office will mark your MIS account as prematurely closed and update the account records accordingly.
What is 5-year Post Office Time Deposit (TD) Account?
The Post Office Time Deposit (TD) Account spans over 5 years and is a stable investment plan available through the Indian Post Office. This scheme permits individuals to invest a lump sum for a specific duration without the option of withdrawal until the maturity period of 5 years is completed. The minimum deposit amount required to open an account is Rs 200.
The account offers a predetermined interest rate set by the government, which is currently 6.7% per annum. Interest is compounded on an annual basis, signifying that it is incorporated into your account once every year. Additionally, any interest earned is subject to taxation.
Upon maturity after 5 years, you will receive the principal amount along with the accumulated interest. You have the option to either withdraw the maturity amount in cash or credit it to your savings account.
Premature withdrawal of funds is allowed, but it comes with certain conditions and penalties. The rate of interest for withdrawing funds prematurely is less than the standard interest rate.
The 5-year Post Office Time Deposit Account is a secure and reliable savings option for individuals who want to invest a lump sum amount for a fixed period and earn a steady return on their investment.
What exactly does a 5-year Post Office RD (Recurring Deposit) Account entail?
The 5-year Post Office RD (Recurring Deposit) Account is a savings scheme offered by the Indian Post Office. This program allows you to commit a set sum monthly for a span of 5 years. You’re required to deposit at least Rs 10 initially, and subsequent deposits can be made in increments of Rs 5 or more.
The account earns an interest rate set by the government, which is currently 5.8% per annum. Interest is compounded quarterly, ensuring that it’s calculated and added to your account every three months. This results in compounded returns for your investment.
At the end of the 5-year term, you will receive the principal amount deposited along with the accumulated interest. The maturity amount can be withdrawn in cash or credited to your savings account.
One important thing to note is that premature closure of the account is allowed after 3 years, but with certain conditions and penalties.
The 5-year Post Office RD Account is a reliable and secure savings option for individuals looking to save regularly over a fixed period of time.
Post Office FD Interest Rates 2023
The Indian Government’s Department of Posts, under the Ministry of Communications, provides fixed deposit accounts that give you a chance to save your money and earn interest. These accounts come with varying timeframes, ranging from one year to five years. The post office offers interest rates between 6.80% and 7.50%. The interest is paid once a year. You can start a fixed deposit account with a minimum deposit of Rs.1,000, and there is no maximum limit, so you can deposit as much as you want.
Post Office Fixed Deposit Rates
| Tenure (Years) | Interest Rate (%) |
|---|---|
| 1 | 6.80% |
| 2 | 6.90% |
| 3 | 7.20% |
| 5 | 7.50% |
Kindly be aware that these rates may be altered at any time.
Rates for Tax-Saving Post Office 5-year Fixed Deposit
If you decide to put your money in a fixed deposit at the post office for 5 years, you can get some tax benefits. This means you can save on your income tax under Section 80C of the Income Tax Act, 1961.
| Tenure | Regular Post Office FD rates (p.a) |
| 60 months | 7.50% |
Post Office Time Deposit Account
The Post Office Time Deposit (TD) Account, which is also called the Post Office Fixed Deposit (FD) account, allows you to save money for a fixed period of time. To initiate this account, you only need to deposit a minimum of Rs.1,000. You have the flexibility to add additional funds in increments of Rs.100, with no ceiling on the total amount you can deposit.
Features of Post Office Fixed deposit
- You can transfer your account from one post office to another anywhere in the country.
- You can open as many accounts as you want in any post office across the country.
- You can convert a single account into a joint account or vice versa.
- You can nominate someone to receive the account’s benefits when opening the account or even afterwards.
- You can open an account using either a cheque or cash.
- To initiate an account, a minimum deposit of Rs.1,000 is necessary.
- There are no restrictions on the amount you can deposit; you’re free to deposit as much as you desire.
- Once a minor comes of age, their account must transition into a standard one.
- To prolong the duration of your account, you must submit an application.
- Interest is deposited into your account once every year.
- The amount of interest you’ve gained will be directly added to your savings account balance.
Types of Post Office FD Schemes
Here are different types of Post Office FD schemes:
- Post Office Savings Account: It is a popular and easily accessible savings account in India. You can open a Post Office Savings Account with a minimum balance of Rs.500. Only one account is allowed per person, and there is no limit on the maximum balance. Feel free to deposit any amount of money into this account without any restrictions.
- National Savings Monthly Income Account: This account helps depositors manage their regular expenses by providing a monthly income in the form of interest. It is designed to provide a steady income stream.
Post Office FD Rates and Banks FD Rates – A Comparison
Bank Name |
FD Rates (%) |
Post Office FD Rates (%) |
|---|---|---|
State Bank of India |
5.50% – 6.50% |
5.50% – 6.70% |
HDFC Bank |
5.10% – 5.75% |
5.50% – 6.70% |
ICICI Bank |
5.15% – 5.75% |
5.50% – 6.70% |
Punjab National Bank |
4.75% – 6.00% |
5.50% – 6.70% |
Bank of Baroda |
4.75% – 5.75% |
5.50% – 6.70% |
Post Office |
– |
6.80% – 7.50% |
Kindly be aware that the interest rates for Fixed Deposits (FDs) listed previously serve as estimates and are subject to change depending on variables such as the duration of the deposit and the deposited sum.
Post Office FD Scheme Features
The Post Office Fixed Deposit (FD) scheme offers the following features:
- Tenure: The duration of a Post Office Fixed Deposit (FD) varies from one year to five years. Investors have the flexibility to select the timeframe that aligns with their investment objectives.
- Interest Rates: The interest rates for Post Office FDs are set by the government and are typically higher than those offered by banks. The rates are revised periodically.
- Minimum Deposit: To initiate a Post Office Fixed Deposit, a minimum deposit of Rs. 1,000 is obligatory. Investors can contribute any sum beyond this threshold, as there’s no upper limit imposed.
- Interest Payment: Each year, depositors receive an annual payout of interest, ensuring a consistent flow of income. The interest they earn is subject to taxation, with taxes deducted directly if it surpasses a predetermined threshold.
- Premature Withdrawal: Premature withdrawal is allowed after completion of 6 months, subject to certain conditions. In such cases, a penalty is applied on the interest earned.
- Nomination Facility: Depositors can nominate a person to receive the FD proceeds in case of their demise.
- Safety and Security: Investing in Post Office Fixed Deposits (FDs) offers a secure option as they are supported by the Indian government, ensuring safety for investors. Your invested capital and the accrued interest are both assured, making it a reliable investment avenue.
- Accessibility: Post Office FDs are widely accessible across the country through various post office branches, making it convenient for investors to open and manage their accounts.
Who can open a Fixed Deposit Account?
If you meet certain criteria, you’re eligible to initiate a time deposit account through India Post.
- As long as you’re 18 years or older, you’re eligible to independently open a time deposit account.
- If you’re interested in opening a joint account, you’re allowed to include up to three adults in the process. This means that up to three people can open a time deposit account together.
- If you are a minor (below 18 years) but above 10 years of age, you can open a time deposit account with India Post in your own name.
- If you are a guardian, you can open a time deposit account on behalf of a minor or a person who is mentally incapable of managing their own affairs.
Documents Required for Post Office FD Scheme
To open a Post Office Fixed Deposit (FD) scheme, you will need the following documents:
- Post Office FD application form: This document, supplied by the post office, requires completion with your personal information.
- Proof of address: To confirm your address, please present a valid document that clearly shows where you reside. Acceptable proofs may include utility bills like telephone or electricity bills, official documents such as passports, or any other relevant official paperwork with your address stated.
- Proof of identity: You must furnish a document validating your identity. Acceptable options encompass the Aadhaar card, PAN card, driver’s license, Voter ID card, or any equivalent government-issued identification card.
Account Extension of Post Office FD Scheme
To prolong the duration of your Fixed Deposit (FD) account beyond its expiry date, you must complete Form-3, also known as the Application for Account Extension. As the account holder, it falls upon you to ensure the submission of this form.
Kindly be aware that there’s a specific timeframe allotted for applying for an extension. If you miss this window, upon maturity of your account, you’ll be required to withdraw the funds.
You’re given the opportunity to extend the maturity date of your fixed deposit twice starting from when you initially deposited. This allows you to lengthen the period your FD account remains active, enabling you to accumulate additional interest and maintain the security of your funds for an extended duration.
Payment on Account of Death of Account Holder
In the event of the demise of the individual holding a Post Office Fixed Deposit (FD), the funds within the FD account will be disbursed to the designated nominees or lawful inheritors chosen by the account holder. In cases where there are multiple lawful inheritors, the distribution of funds will be based on the specific proportions outlined by the account holder. In the absence of such specifications, an equal division of funds among all lawful inheritors will be implemented. This protocol ensures adherence to the account holder’s wishes or legal regulations concerning inheritance.
Post Office FD calculator
Prior to initiating a Post Office Fixed Deposit (FD) account, take advantage of a complimentary online FD calculator. This user-friendly tool aids in determining the anticipated interest earnings on your investment. Input the investment amount, the prevailing interest rate corresponding to your chosen tenure, and the compounding frequency of interest. Upon submitting these particulars, the calculator promptly displays the precise amount you stand to earn, inclusive of interest. Utilizing this resource provides a straightforward means of comprehending your FD’s potential returns, aiding in informed decision-making.