Post Office Savings Account Interest Rate

One of the most renowned savings accounts in India is believed to be the Post Office Savings account. This could be so because the minimum balance required to operate the account i.e. ?50. At present, the interest rate offered on the post office savings account is 4% p.a. A minor above the age of 10 is permitted to open a savings account in their name.

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An individual is allowed to open only 1 account per. Also, there is no maximum limit on the deposit in the post office savings account. The interest earned on the savings account in the financial year is exempt from tax for up to ?10,000 under the Income-tax act 80TTA.

Post Office Interest Rates Table

Post Office Savings Account

4%

Post Office Recurring Deposit (RD) 5 years

5.8%

Post Office Monthly Income Scheme

6.6%

Post Office FD 3 years

5.4%

Post Office FD 5 years

6.7%

Post Office NSC

6.8%

Post Office KVP

6.9%

Post Office PPF Account

7.1%

Sukanya Samriddhi Account

7.6%

Post Office POSB Interest Rate

4%

Post Office Senior Citizen Account

7,4%

Key Features of Post Office Savings Account

  • The account holder is permitted to close the account at any time as per his/her convenience.
  • Minors above the age of 10 are allowed to operate post office savings account. 
  • In order to keep your post office savings account active, you are required to transact in the account once in 3 years. You can do so by either depositing or withdrawing the amount. 
  • One is required to open the account only by doing a cash deposit.
  • Post office savings account provides nomination facility both at the time of opening the account and after opening the account.
  • Maximum ?10,000 interest earned within a financial year is tax-free as per the Income Tax act 80TTA.
  • The account holder is allowed to transfer his/her savings account from one branch of the post office to another.
  • As per the convenience of account holders, the joint accounts can be converted into single accounts and vice versa.
  • Once you open the account, you can make further deposits and withdrawals via electronic modes in CBS post offices.
  • You can also make the transactions via any ATM machines available near you.

Who Can Open Post Office Savings Account?

  • Minors above the age of 10. 
  • A biological or legal guardian on behalf of a minor or unsound kid.
  • An individual with an unsound mind.
  • To open a joint account, 2 or 3 adults. 
  • Group Accounts, Institutional Accounts, and other accounts such as Security Deposit Accounts & Official Capacity Accounts are not sanctioned.

Documents Required to Open a Post Office Savings Account

You are required to submit a maximum of 2 passport-size photographs of yourself. Apart from that, you are required to provide identity proof and address proof. You can present the following documents for identity proof and address proof:

  1. ID Proof

    • Voter ID Card
    • Ration Card
    • Passport
    • Driving License
    • PhotoID Card from a recognized educational institute
    • Aadhar Card
  2. Address Proof

    The documents provided for address proof must have the present address mentioned on them.

    • Bank or Post Office Passbook
    • Passport
    • Ration Card
    • 3 months old electricity or telephone bills or any utility bill
    • Salary Slip from a reputed Employer
    • Certificate from any Public Authority
    • Aadhar Card

Post Office Savings Account Benefits

  • Cheque facility:Cheque facility is available. Also, it can be requested for existing accounts. 
  • ATM/Debit card:If you have maintained the minimum balance in the post office savings account since the beginning of the account till the time of issuance of debit card, you are permitted to request to ATM/debit card to CBS post offices.
  • Minor Accounts:Minors above the age of 10 years are allowed to open the post office savings account in their name. For minors below the age of 10 years, a parent or legal guardian is required to open and operate the account on their behalf
  • Account Transfer:If you shift your residence or are not satisfied with the services of the post office branch or for any other reason, you can transfer your savings account from the existing post Office Savings Account branch to the branch of your choice. Also, only one account is allowed to open in one post office branch.
  • Nomination:You are allowed to nominate someone at the time of opening the account or after the account is opened. You can nominate the person to receive/withdraw the money from this account after your demise.
  • Joint Accounts:2 or 3 adults are permitted to open and operate the post office savings account together under the joint account facility. Also, you can convert the joint account into a single account and vice versa. 
  • Tax Exemptions:You can enjoy tax exemption on the interest earned in the savings account for up to ?10,000 in one financial year under section 80TTA of Income Tax Act 1961.
  • Electronic Facilities:Customers can do transactions via any electronic mode in CBS Post offices.
  • Long period for Inactivity:In order to keep the account active, you are required to make a transaction in your account only once in 3 years. If you will miss making even a single transaction (deposit or withdraw) the account for 3 years, your account will be deemed inactive. 

Post Office Savings Account Withdrawals

The money deposited in the post office savings account can be withdrawn at any time at the convenience of the account holder. The account holder must keep in mind one condition that he/she needs to maintain the minimum balance. If it is a generic account, then the limit is ?50. If it carried the cheque facility, then the limit is ?500.

Final Word

We can conclude that the normal savings account seems quite similar to the post office savings account; however, the post office savings account is given preference over a normal savings account. It is so because it is considered a more secured investment tool. It comes with the freedom o partial liquidation of funds. In case of emergency, your short notice can be approved in no time. Not only that, if you are new to the investment world and want to keep it low-key with the risks, a post office savings account can turn out to be your go-to investment option at the initial stage which is definitely going to offer you good returns at the end.

Written By: PolicyBazaar - Updated: 09 July 2021
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