Post office monthly income scheme
Post Office Saving Schemes – RD, TD, MIS, SCSS, PPF, NSC, KVP, SSA – Interest Rates, Benefits & Comparison
in this article, we have covered various investment options offered by the post office and the banks ,also investigate their benefits.
Post Office Investment-Savings Schemes
The Post Office Saving Schemes include several reliable products and offer risk-free returns on investment. Around 1.54 lakh post offices spread all over the country operate these schemes. For example, the government operates the PPF scheme via 8200 public sector banks and the post offices in each city.
Savings Schemes Under Post Office Investments
Post Office Savings Account
- The minimum deposit to open a post office savings account is Rs 500.
- The domestic customer can open the account in single or joint ownership.
- An interest rate of 4% p.a. is applicable on the deposits in the post office account.
- You can avail of a cheque book, ATM card, e-banking and mobile banking services, and other services with the account on request. Interest is credited at the end of each financial year.
- Individuals can avail up to Rs 10,000 deduction from the total income under Section 80TTA of the Income Tax Act.
5-Year Post Office Recurring Deposit Account (RD)
- As the name suggests, the tenure of this RD account is fixed for five years.
- You can agree to a fixed monthly deposit payment starting from Rs 100 and earn interest at 5.8% p.a.
- The interest is compounded quarterly.
- You can get a loan of up to 50% against the deposit available in the account after completing 12 instalments without defaulting.
Post Office Time Deposit Account (TD)
- There are four possible tenures for post office time deposit accounts you can choose from, i.e. 1 year, 2 years, 3 years, and 5 years.
- The minimum deposit allowed in this account is Rs 1,000.
- The interest is calculated quarterly but is payable on an annual basis. For a tenure of up to 3 years, the rate is 5.5% p.a., and for a 5-year term, the rate is 6.7% p.a.
- The investment in the account with five year maturity will qualify for Section 80C deduction.
- The Post Office TD account can also be pledged as a security to scheduled or cooperative banks.
- Deposits cannot be withdrawn before the expiry of six months from the date of deposit.
Post Office Monthly Income Scheme Account (MIS)
- You can deposit a sum of Rs 1,000 up to Rs 4.5 lakh in a single account and up to Rs 9 lakh in a joint account.
- You can earn an interest rate of 6.6% p.a. through this account and get a monthly fixed income from the scheme.
- You cannot prematurely close the account before completing one year. Premature closure beyond one year can attract penalties.
- For example, if you invest up to Rs 4.5 lakh in Post office MIS account for a term of 5 years, you will receive monthly interest of Rs 2,475 every month up to the end of the tenure. You wil get the deposit amount of Rs 4.5 lakh at the end of the term of five years.
- The interest income in post office TD/RD is received at the end of the term but interest from post office MIS is received monthly during the tenure of scheme.
Senior Citizen Savings Scheme (SCSS)
- This is a government-backed retirement scheme that allows you to make a lump sum deposit, i.e., one instalment.
- The deposit can range from Rs 1,000 up to Rs 15 lakh.
- The account can be opened individually or jointly with spouse only.
- The scheme offers an interest rate of 7.4% p.a. The interest is payable quarterly.
- Individuals above the age of 60 are eligible to open this account.
- Retired civilian employees aged between 55 years and 60 years and retired defence employees aged between 50 years and 60 years can also open the account subject to investing the retirement benefits within one month from the date of receipt of the benefits.
- The investment under this scheme qualifies for deduction under Section 80C of the Income Tax Act.
15-Year Public Provident Fund Account (PPF)
- Many salaried individuals prefer PPF as an investment and retirement tool as the scheme offers income tax deductions up to Rs 1.5 lakh per financial year under Section 80C.
- The minimum deposit required to open the account is Rs 500, and the upper limit is Rs 1.5 lakh.
- The account tenure is 15 years from the date of opening the account. You only have to pay Rs 500 per financial year to keep the account active.
- The scheme offers an interest rate of 7.1% p.a. compounded annually. Also, the interest earned on this account is tax-free.
- The amount invested in PPF can be claimed as deduction under Section 80C of the Income Tax Act.
- The investor can extend the account for further five years block
National Savings Certificates (NSC)
- NSC comes with a tenure of five years, where you need to make a minimum deposit of Rs 1,000.
- There is no maximum deposit defined for this account.
- The interest rate of 6.8% p.a. is compounded annually and paid out only at maturity.
- An individual can open any number of accounts under the scheme.
- The certificate can be pledged or transferred as security to the housing finance company, banks, government companies, and others.
- For example, Rs 1,00,000 invested will grow to Rs 1,38,949.29 after five years.
- The amount deposited in this account qualifies for Section 80C deduction.
- NSC can be pledged as a security with scheduled or co-operative banks.
- Currently National Savings Certificate (VIIIth Issue) is accessible.
Kisan Vikas Patra (KVP)
- The attraction of this scheme is that you can double your investment over the tenure of the account.
- The minimum deposit for this account is Rs 1,000. As per the rates applicable to the fourth quarter of the fiscal year 2020-21, the applicable interest rate is 6.9% p.a.
- The account tenure is 124 months (10 years and four months). The amount invested gets doubled in this tenure. Rs 1 lakh invested in KVP will grow to Rs 2 lakh in 124 months.
- Please note that the tenure of the account varies with the variation in the interest rate.
- KVP can be pledged as a security with scheduled or co-operative banks.
Sukanya Samriddhi Accounts (SSA)
- This is a government scheme dedicated to the financial well-being of the girl child.
- Only girl children below the age of 10 years are eligible to get the benefits of this account.
- The account must be opened and operated by parents or guardians till the girl child attains 18 years of age.
- The minimum deposit required is Rs 250 and a maximum of Rs 1.5 lakh per financial year.
- An interest rate of 7.6% p.a. is applicable. The interest is calculated every year and compounded annually.
- The interest earned is exempt from tax.
- The guardian can operate the account until the girl child attains 18 years of age.
- You can deposit for a maximum of 15 years from the date of opening the account.
- The deposits made in SSA account will qualify for deduction under Section 80C of the Income Tax Act.
Comparison of the Various Post Office Savings Schemes
| Scheme | Interest Rate | Minimum Investment | Maximum Investment | Eligibility | Tax Implications |
| Post Office Savings Account | 4% per annum (p.a.) | –Rs 20 –Non-cheque facility – Rs 50 | No limit | Resident Indian, minor and major | Tax-free interest up to Rs 50,000 from the financial year 2018-19 |
| Post Office Time Deposit Account (TD) | First year – 5.5% p.a. Second year – 5.5% p.a. Third Year – 5.5% p.a. Fourth Year – 6.7% p.a. | Rs 200 | No limit | Individual | -Tax benefits up to 5 years under Section 80C on deposits -TDS to be deducted on interest earned for more than Rs 40,000 p.a.(Rs 50,000 in case of senior citizens) |
| Post Office Monthly Income Scheme Account (MIS) | 6.6% per annum payable monthly | Rs 1,500 | For single account- Rs 4.5 lakh Joint account accounts- Rs 9 lakh | Individual | -Interest earned is taxable, and no deduction under Sec 80C for deposits made. -TDS to be deducted on interest earned for more than Rs 40,000 p.a.(Rs 50,000 in case of senior citizens) |
| Senior Citizen Savings Scheme (SCSS) | 7.4% p.a. (Compounded annually) | Rs 1,000 | Maximum deposit over the lifetime allowed at Rs 15 lakh | Individuals of age> 60 years or age >55 years who have opted for VRS or superannuation | – Tax benefit under Section 80C for deposits – TDS to be deducted on interest earned for more than Rs 50,000 p.a. |
| 15-year Public Provident Fund Account (PPF) | 7.1% p.a. (Compounded annually) | Rs 500 per financial year | Rs 1.5 lakh per financial year | Individual | Tax rebate under Section 80C for deposits (maximum Rs 1.5 lakh p.a.) Interest is tax-free. |
| National Savings Certificates (NSC) | 6.8% p.a. (Compounded annually) | Rs 100 | No limit | Individual | Tax rebate under section 80C for deposits (maximum Rs 1.5 lakh p.a.) |
| Kisan Vikas Patra (KVP) | 6.9% p.a. (Compounded annually) | Rs 1,000 | No limit | Individual (Adult) | Interest is taxable, but no tax on the amount received on maturity |
| Sukanya Samriddhi Accounts | 7.6% p.a. (Compounded annually) | Rs 1,000 per financial year | Rs 1.5 lakh per financial year | Girl Child – up to 10 years from birth and one additional year of grace | Investment (up to Rs 1.5 lakh exempt under Section 80C), interest and amount received on maturity is tax-free |
Advantages of the Post Office Investment-Saving Schemes in India
Easy to Invest
The saving schemes are easy to enrol in and best suited for rural and urban investors. Anyone who wants to hedge risk in the portfolio for a fixed decent return can invest in these schemes. The simplicity and availability make these investments a much-preferred savings cum investment option.
Documentation and Procedures
Limited documentation and proper procedures in the post office ensure that these saving schemes are simple to opt for and safe to be locked onto as the government backs them.
Fulfilment of Investments Goals
The investments in the Post Office Schemes are long-term oriented, with the investment period extending up to 15 years for a PPF account. Therefore, these investment options are excellent for retirement and pension planning.
Tax Exemption
Most of these schemes are eligible for tax rebates under Section 80C for the deposit amount. Few schemes like the PPF, the Sukanya Samriddhi Yojana, etc., also have the interest earned amount exempted from taxation.
Interest Rates
Interest rates in these schemes range from 4% to 9% and are risk-free. There is a minimal amount of risk involved, as the Government of India undertakes these investment options.
Different Buckets of Products
There is a wide range of products based on different types of individuals. Well-known schemes are Public Provident Fund (PPF), Kisan Vikas Patra and Sukanya Samriddhi Yojanas. The government has made these small savings schemes available via post offices to provide a safe investment avenue for the public by providing good returns and keeping their investments safe. These schemes are easy to manage. If the features and benefits iterated above meet your financial goals, then invest in a post office savings scheme to secure your financial future at minimal risk.
How to Open a Post Office Saving Schemes Account?
Post Office Saving Schemes are suitable for individuals with a low-risk appetite. The returns from these schemes are not prone to market fluctuations, making it ideal for risk-averse investors who still wish to make the most of their savings.
You can open a recurring deposit or term deposit account online through the mobile app.
Steps to Open a Recurring Deposit or Term Deposit Account Through Mobile
Step 1: Download and log into the India Post Mobile Banking app on your mobile from Google Play Store.
Step 2: Upon successful login, select the ‘Requests’ tab on the home screen to open a POFD account.
Step 3: Enter the details, such as the deposit amount, tenure, the account from which you want to deposit the money, nominee, and others to open the account.
For opening an account under any other post office saving schemes, you need to visit the home branch of the post office.
Steps to Open Any Other Post Office Savings Scheme
Step 1: Download and print the relevant application form from the post office’s official website.
Step 2: Attach all the necessary documents.
Step 3: Visit your home branch of the post office and submit the documentation to the relevant personnel.
Documents Required
- Account Opening Form
- KYC Form (For new customer/modification in KYC details))
- PAN Card
- Aadhaar card, if Aadhaar is not made available, the following document may be submitted.
- Passport
- Driving license
- Voter’s ID card
- Job card issued by MNREGA signed by the state government officer
- Letter issued by the National Population Register containing details of name and address.
- Proof of date of birth/birth certificate in case of a minor account.
Frequently Asked Questions
Can Monthly Income Scheme (MIS) interest be credited to Recurring Deposit (RD) account
MIS interest cannot be credited to post office RD account. It can be credited to post office savings account. You can give standing instruction to debit RD amount from SB account. An application form should be submitted to respective Post Office for the same.
What are the premature encashment conditions for post office savings scheme?
| Savings account | No lock-in period |
| RD | After 3 years, but SB rate of interest will be applicable |
| TD | After 6 months but preclosure fee is applicable |
| MIS | After 1 year but preclosure fee is applicable. |
| PPF | After 5 years but only in specific cases such as- Severe illness, higher studies, and NRI status. |
| SSA | After 5 years of account opening for extreme compassionate grounds |
| SCSS | No lock-in period but preclosure fee is applicable. |
| NSC (VIII Issue) | Premature withdrawal is not permitted (except in case of death and forfeiture). |
| KVP | After 2.5 years |
Is there a tax rebate for investment in post office savings schemes?
You can take Section 80C deduction for investment in most of the post office savings scheme. However, such tax deduction is not available for investment post office MIS or recurring deposit schemes.
Fixed Deposit Interest Rates of Top 10 Banks in India for below Rs.2 crore
Given below are the latest interest rates offered by top banks for tenures ranging from 7 days to 10 years as of October 2022.
Name of Bank | For General Citizens (p.a.) | For Senior Citizens (p.a) |
2.90% to 5.65% | 3.40% to 6.45% | |
|
| 2.75% to 6.10% | 3.25% to 6.60% |
2.70% to 5.75% | 3.20% to 6.50% | |
2.50% to 6.10% | 3.00% to 6.60% | |
3.25% to 7.00% | 3.75% to 7.50% | |
3.00% to 6.10% | 3.50% to 6.60% | |
2.90% to 6.00% | 2.90% to 6.50% | |
2.75% to 5.75% | 2.75% to 6.50% | |
|
| 3.00% to 5.50% | 3.50% to 6.50% |
3.50% to 6.90% | 4.00% to 7.40% |
FD Rates Offered by Other Popular Banks in India for below Rs.2 crore
The fixed deposit interest rates offered by other banks in India are given below for deposits below Rs.2 crore, as of October 2022. These are for tenures ranging from 7 days to 10 years.
Name of Bank | For General Citizens (p.a.) | For Senior Citizens (p.a) |
3.25% to 6.75% | 3.75% to 7.50% | |
3.50% to 6.75% | 4.25% to 7.50% | |
2.55% to 5.60% | 2.80% to 6.10% | |
2.75% to 5.60% | Contact the bank | |
2.80% to 5.60% | 3.30% to 6.10% | |
3.25% to 6.00% | 3.75% to 6.50% | |
|
| 3.00% to 7.00% | 3.75% to 7.50% |
2.50% to 6.50% | Contact the bank | |
2.25% to 6.00% | 2.75% to 6.50% | |
2.75% to 7.00% | 2.75% to 7.00% | |
2.50% to 7.00% | Contact the bank |
SBI has launched Utsav fixed deposit scheme
On the occasion of Independence Day, the State Bank of India (SBI), launched a new term deposit scheme known as ‘Utsav Deposit.’ This fixed deposit offers higher interest rates and is available for a period of 75 days. SBI’s Utsav Fixed Deposit Scheme offers an interest rate of 6.10% p.a. on a tenure of 1,000 days. Senior citizens will receive an additional interest rate of 0.50% p.a. These interest rates are effective from 15 September 2022.
Types of Fixed Deposits
- Normal Fixed Deposits
- Tax-Saving Fixed Deposits
- Senior Citizen Fixed Deposits
- NRI Fixed Deposits
- Cumulative/Non-Cumulative Fixed Deposits
- Flexi Fixed Deposits
Features of a Fixed Deposit Account
- Safer than other investment vehicles.
- Lets you earn interest over a fixed period of time.
- Flexible tenures of up to 10 years.
- No cap on the maximum deposit.
- Additional rates for senior citizens.
Top 10 Tax Saver FD Interest Rates
Tax-saver FDs offer a maximum deduction of Rs.1.5 lakh under Section 80C of the Income Tax Act with the maximum deposit permissible being Rs.1.5 lakh. The lock-in period is 5 years. Senior citizens are offered an additional interest rate.
These are the interest rates as of October 2022.
Name of the Tax Saving FD | For General Citizens (p.a.) | For Senior Citizens (p.a.) |
|
| 5.50% | 6.30% |
6.75% | 7.50% | |
6.55% | 7.05% | |
6.10% | 6.60% | |
5.75% | 6.25% | |
5.75% | 6.50% | |
5.50% | 6.50% | |
|
| 6.50% | Contact the bank |
5.75% | Contact the bank | |
5.65% onwards | 6.15% onwards | |
Punjab and Sind Bank Tax Saving FD | 5.75% | 6.25% |
5.80% onwards | 6.55% |
Highest Small Finance Bank FD Interest Rates for Below Rs.2 crore
Small Finance Banks also provide high interest rates on FDs. Here are the highest interest rates for deposits below Rs.2 crore for tenures ranging from 7 days to 10 years effective from October 2022.
Name of Bank | For General Citizens (p.a.) | For Senior Citizens (p.a.) |
2.50% to 7.35% | 3.30% to 8.15% | |
4.00% to 7.50% | 4.75% to 8.25% | |
3.50% to 7.00% | 4.00% to 7.50% |
Top NBFCs FD Interest Rates (Non-Banking Financial Companies)
NBFCs also offer competitive interest rates on their fixed deposit accounts. Here are the highest interest rates for tenures ranging from 1 year to 5 years for deposits less than Rs.2 crore effective from October 2022.
Name of Bank | Tenure | For General Citizens (p.a.) | For Senior Citizens (p.a.) |
12 months to 60 months | 5.95% to 6.95% (up to deposit of Rs.20 crore for cumulative) | 6.15% to 7.15% (up to deposit of Rs.20 crore for cumulative) | |
12 months to 120 months | 6.50% to 7.30% (cumulative) | 6.25% to 7.55% (cumulative) | |
12 months to 60 months | Up to 8.25% (non-cumulative) | Contact the bank |
Highest 1 Year FD Interest Rates
These are the highest 1-year FD rates offered by banks effective from October 2022:
Name of Bank | For General Citizens (p.a.) | For Senior Citizens (p.a.) |
IDFC First Bank | 5.75% | 6.25% |
Bank of India | 5.30% | Contact the bank |
IDBI Bank | 5.60% | 6.10% |
Punjab National Bank | 5.50% | 6.00% |
Canara Bank | 5.50% | 6.00% |
State Bank of India | 5.45% | 5.95% |
Punjab and Sind Bank | 5.65% | 5.65% |
Highest 2 Year FD Interest Rates
These are the highest 2-year FD rates offered by banks effective from October 2022:
Name of Bank | For General Citizens (p.a.) | For Senior Citizens (p.a.) |
IDFC First Bank | 6.50% | 7.50% |
IDBI Bank | 5.65% | 6.40% |
Union Bank of India | 5.45% | Contact the bank |
Canara Bank | 5.60% | 6.10% |
Highest 3 Year FD Interest Rates
These are the highest 3-year FD rates offered by banks effective from October 2022:
Name of Bank | For General Citizens (p.a.) | For Senior Citizens (p.a.) |
IDFC First Bank | 6.50% | 7.00% |
Axis Bank | 5.70% | 6.45% |
IDBI Bank | 5.75% | 6.50% |
State Bank of India | 5.60% | 6.10% |
Punjab and Sind Bank | 5.75% | 6.25% |
Karnataka Bank Launches New FD Scheme
A new fixed deposit scheme called KBL Amrit Samriddhi scheme was launched by Karnataka Bank on the occasion of the Independence Day and mark the platinum jubilee of the day on which the country got its independence.
The bank will offer an interest rate of 6.10% on tenure of 525 days.
Best 5 Year FD Interest Rates
These are the highest 5-year FD rates offered by banks effective from October 2022:
Name of Bank | For General Citizens (p.a.) | For Senior Citizens (p.a.) |
IDFC First Bank | 6.50% | 7.00% |
Union Bank of India | 5.75% | Contact the bank |
IDBI Bank | 5.80% | 6.55% |
Canara Bank | 5.75% | 6.25% |
Axis Bank | 5.75% | 6.50% |
State Bank of India | 5.65% | 6.45% |
Senior Citizen Fixed Deposits
Fixed deposits for senior citizens have some features that differentiate them from fixed deposits for the general public, such as:
- The depositor should be 60 years and above at the time of opening the fixed deposit account
- Depending on the bank, interest rates are higher by 0.25% to 0.50%
- The tenure is between 7 days and 10 days
- Loan against FD can be availed
- Penalties for premature withdrawal are the same as for the general public
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