People mostly prefer to have a post office savings account as it becomes easy to deposit to the account. And at the time of need, the money can be easily withdrawn. Today the process to open a savings account has become easy when compared to the olden days. Moreover, on the account balance, the account holder earns reasonable interest.Read more
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The Post Office Savings Account is one deposit scheme that is provided by the India Post throughout the country. This savings account offers an interest rate on the balance in the account.
This scheme is beneficial for any individual investor who is looking forward to earning interest by simply investing a portion of the financial assets. This Post Office Savings Account remains popular amongst the rural part of India. The reach of the India Post is greater compared to any bank. The underprivileged people have easy access to a savings account via the post offices.
|Scheme Name||Post Office Savings Account|
|Rate of Interest||4% per annum|
|Minimum Investment Amount||Rs. 20
Rs. 50 for account holders without a cheque book
|Maximum Investment Amount||No limit|
|Tax Exemption||Interest up to Rs. 50,000 is exempted|
Anyone who wishes to open the Post Office Savings Account needs to follow the below steps:
Step 1: An individual can get the form online as well as by visiting the nearby post office. For senior citizens, separate forms are available.
Step 2: Once the application form is generated, fill in all the details required.
Step 3: Submit the form with all the required documents and a passport size photograph.
Step 4: Pay the initial minimum deposit amount, that is, Rs. 20 in general.
Step 5: In case the individual wishes to open the account without a cheque book then Rs. 50 deposit amount is required.
Finally, after the completion of the above steps, the Post Office Savings Account Online will be opened in 2-3 business days.
If an individual wish to open a Post Office Savings Account, then the following charges will be applicable and should be taken into consideration:
|Services Offered||Charges Applied|
|Provision of new or duplicate cheque book||Rs. 50|
|Provision of receipt for deposits made||Rs. 20 for every receipt|
|Provision of account statement||Rs. 20 for every statement|
|Changes in nomination||Rs. 50|
|Provision of new passbook||Rs. 10 for every registration|
|Provision of transferring an account||Rs. 100|
|Cheque dishonor||Rs. 100|
At the time of opening the Post Office Savings Account, the nomination is a mandate. The following can easily open the account:
Any single adult and as a single account, only one account can be opened by the individual.
Two adults that would be Joint A or Joint B. In case of demise of the joint holder, the surviving holder is going to be the holder solely and when the surviving holder has a single account, then the joint account needs to be closed.
A minor who is 10 years of age and above. This account needs to be opened in the name of the minor. Once the minor attains the majority, then along with the KYC documents fresh account opening form of the Post Office Savings Account need to be submitted at the respective post office for the conversion in the name respectively.
A guardian on behalf of the minor.
A guardian on behalf of the person of an unsound mind. This account needs to be opened in the name of the unsound mind.
It is to be noted that conversion of a single to a joint account and vice-versa is not permitted.
Group Accounts, Official Capacity Accounts, and Security Deposit Accounts are not eligible for Post Office Savings Account.
Take a look below to understand the interest rate:
The interest rate is 4% per annum on both individual and joint accounts.
The interest is calculated upon the minimum balance between the tenth and end of the month. This is permitted in whole rupees only.
No interest is permitted in a month when the balance between a tenth and the last day of a month is below Rs. 500.
The interest will be credited to the account towards the financial year-end at the interest rate that is prescribed by the Ministry of Finance.
During the closure of the account, interest will be paid to the month preceding in, which the account is closed.
Under Section 80TTA of the IT Act, from all of the savings bank accounts, the interest up to Rs 10,000 earned in the Financial Year remains tax exempted.
|Scheme||Interest Rate (Updated)||Minimum Investment||Maximum Investment||Eligibility||Tax Implications|
|Post Office Savings Account||4%||Rs. 20
Rs. 50 (if not by cheque)
|Exempted Interest up to Rs. 50,000|
|Kisan Vikas Patra Account||6.9% per annum (Annually Compounded)||Rs. 1,000||No limit||Individual||Interest is taxed but the maturity amount is tax-free|
|National Savings Certificates (NSC)||6.8% per annum (Annually Compounded) Paid at maturity||Rs. 100||No Limit||Individual||Tax benefit up to Rs. 1,50,000 under Section 80C of the IT Act|
|National Savings Monthly Income Account||6.6% per annum payable monthly||Rs. 1,500||For Individual holder Rs. 4.5 lakhs
For Joint holders Rs. 9 lakhs
|Individual||Interest earned is taxable with no deductions|
|National Savings Recurring Deposit Account||5.80%||Rs. 10||No limit||Individuals including Minors||Exempted Interest up to Rs. 50,000|
|National Savings Time Deposit Account||5.5% – 6.7%||Rs. 200||No limit||Individual||Section 80C deduction on deposits for 5 Years|
|Public Provident Fund Account (PPF)||7.1% per annum (Annually Compounded)||Rs. 500 annually||Rs. 1,50,000 annually||Individual||Tax benefits can be availed under Section 80C of the IT Act|
|Senior Citizen Savings Scheme Account||7.4% per annum (Annually Compounded)||Rs. 1,000||Rs. 15 lakhs||People above 60 and 50 years of age who have taken VRS or superannuation||Tax benefits can be availed under Section 80C of the IT Act
Tax deductions if the interest earned is more than Rs. 50,000
|Sukanya Samriddhi Account||7.6% per annum (Annually Compounded)||Rs. 1,000 annually||Rs. 1,50,000 annually||Girl Child with age up to the age of 10 years||Interest and maturity amount is tax-free under Section 80C of the IT Act|
All the deposits or withdrawals for the Post Office Savings Account will be only for whole rupees. Take a look below, to understand the deposits and withdrawals:
|Minimum Deposit Amount||Rs 500 (The following deposit should not be less than Rs 10)|
|Maximum Deposit Amount||No limit|
|Minimum Withdrawal Amount||Rs 50|
Besides, no withdrawal will be allowed that affects reducing the minimum sum of Rs 500. At the end of the financial year, if the account balance is not raised to the sum of Rs 500 then Rs 100 is going to be deducted as the charge for the maintenance of the account. Also, when the balance in the account is nil thereafter the account will automatically stand closed.
The following are the key benefits of opening an account online:
The account opening process of the Post Office Savings Account is hassle-free and swift.
The individuals can easily avail themselves of the tax benefits on the earned interest. The earned interest remains tax exempted; however, the tax benefits are as per the prevailing laws.
The account does not offer any lock-in or a maturity period, unlike any FD scheme.
The single account can be converted to a joint account and vice versa.
The Post Office Savings Account remains transferable from one branch of the post office to another.
When in the Post Office Savings Account neither any deposit nor withdrawal takes place for continuous three financial years, the account will be treated dormant or silent.
The revival of such an account will be done by simply submitting an application with the KYC documents along with a passbook at the respective post office.
The following are facilities on the Post Office Savings Account that can be availed upon submitting the respective form at the respective post office:
Mobile banking/ e-banking
Pradhan Mantri Jeevan Jyoti Bima Yojana
Pradhan Mantri Suraksha Bima Yojana
Atal Pension Yojana