Post Office Savings Schemes

Savings Bank

Savings Bank accounts are ruled by POSB Rule 1878. There are three types of accounts. They are

Individual Account

  • Any individual can open an account.
  • Types of accounts: (i) Single Account (ii) Joint Account (iii) Pension Account
  • Cheque facility available
  • Minimum Rs.50/- for non cheque account and Rs.500/- for Cheque Account.
  • There will be no maximum limit for retaining balance in single as well as Joint savings account.
  • Rate of interest 4.0% per annum

From the Financial year 2011-12, Interest income of Rs.3500/- in the case of single account and Rs.7000/- in case of Joint account will be exempted from Income Tax. (Section 10(15) (i) of Income Tax Act, 1961 amended vide Notification No. 32/2010 {F.No. 173/13/2011-IT A.I}/S.O.1296(E) dated 03.06.2011)

It is the duty of the depositor(s) to show the interest income earned from Post Office Savings Account(s) beyond the limit prescribed above in the Income Tax return and pay due Income Tax.

Monthly Income Scheme (MIS)

  • Safe & sure way to get a regular monthly income. Specially suited for retired employees/ Senior Citizens or any one with high sum for investment .
  • Minimum limit: In multiples of Rs.1500/- Maximum limit: Rs. 4.5 Lakhs in Single Account and Rs. 9 Lakhs in Joint Account.
  • Maturity Period - Six Years for accounts opened prior to 01.12.2011 and Five years for accounts opened on or after 01.12.2011
  • Rate of interest 8.5% per annum with effect from 01.04.2012
  • No bonus for accounts opened on or after 01.12.2011
  • Premature encashment after one year upto 3 years at 3.5% discount.
  • Post maturity Interest at the rate applicable from time to time (at present 3.5%)
  • Auto credit facility to SB Account.
  • Deposit in Monthly Income Scheme and invest interest in Recurring Deposit to get 10.5% (approx) interest.
  • Above scheme operates automatically, if you open a saving bank account and give a request for automatic transfer of Monthly Income Scheme interest to Recurring Deposit through Saving Bank account.

Recurring Deposit (RD)

  • Any individual (a single adult or two adults jointly) can open an account.
  • Minimum: Rs.10/- and multiples of Rs.5/- thereafter. Maximum: No limit.
  • Maturity period 5 years.
  • Rate of interest 8.4% per annum with effect from 01.04.2012
  • 6 and 12 months Advance Deposits earn rebate.
  • Four defaults are allowed.
  • Defaults can be paid within two months.
  • One withdrawal upto 50% of the balance allowed after one year.
  • Premature closure allowed after three years.
  • Pay Roll Savings Scheme is also available for employees of various Establishments.
  • Interest earned is deductible under Section 80L of I.T. Act.
  • Can be continued for another 5 years - on year to year basis also with or without monthly deposit.
  • Amount repayable on a RD account of Rs.10/- denomination opened on or after 01.04.2012 shall be Rs.746.51.

Time Deposit (TD)

  • Any individual (a single adult or two adults jointly) can open an account.
  • Minimum: Rs.200/- and multiples of Rs.200/- Maximum: No limit.
  • 1 Year, 2 Year, 3 Year and 5 Year TD can be opened.
  • 2, 3 & 5 Year TD Accounts can be closed after one year at a discount.
  • Revised rate of interest for accounts opened on or after 01.04.2012 is as follows

1 Year Account 2 Year Account 3 Year Account 5 Year Account
8.2% 8.3% 8.4% 8.5%

In case of premature closure of 1 Yr, 2 yr, 3 Yr and 5 Yr account on or after 01.12.2011, if the deposit is withdrawn after 6 months but before the expire of one year from the date of deposit, simple interest at the rate applicable to from time to time to Post office savings account shall be payable.

In case of premature closure of 2 yr, 3 yr or 5 yr account on or after 01.12.2011, if the deposit is withdrawn after the expiry of one year from the date of deposit, interest on such deposits shall be calculated at the rate, which shall be one per cent less than the rate specified for a period of a deposit of 1 yr, 2 year or 3 years as mentioned in the concerned table given under Rule 7 of PO TD rules.

Senior Citizens Savings Scheme (SCSS)

  • A new avenue of investment and return for Senior Citizen.
  • The account may be opened by an individual,
    • Who has attained age of 60 years or above on the date of opening of the account.
    • Who has attained the age 55 years or more but less than 60 years and has retired under a Voluntary Retirement Scheme or a Special Voluntary Retirement Scheme on the date of opening of the account within three months from the date of retirement.
    • No age limit for the retired personnel of Defence services provided they fulfill other specified conditions.
  • The account may be opened in individual capacity or jointly with spouse.
  • Non-resident Indians (NRIs) and Hindu Undivided Family (HUF) are not eligible to open an account.
  • The individual may open one or more account in the multiple of Rs.1000/-, subject to a maximum limit of Rs.15 lakh. Further, more than one account cannot be opened in the same post office during a calendar month.
  • No withdrawal shall be permitted before the expiry of a period of five years from the date of opening of the account. The depositor may extend the account for a further period of 3 years.
  • Premature closure of account is permitted
    • After one year but before 2 years on deduction of 1 ½ % of the deposit.
    • After one year but before 2 years on deduction of 1 ½ % of the deposit.
    • After 2 years but before date of maturity on deduction of 1% of the deposit.
  • In case of death of the depositor before maturity, the account shall be closed and deposit refunded without any deduction along with interest.
  • Interest @ 9.3% per annum, payable from the date of deposit of 31st March/30th Sept/31st December in the first instance & thereafter, interest shall be payable on 31st March, 30th June, 30th Sept and 31st December. Interest can be automatically credited to savings account provided both the accounts stand in the same post office.
  • Interest rounded off to the nearest multiple of rupee one.
  • Post Maturity Interest at the rate applicable to the deposits under Post Office Savings Accounts from time to time is admissible for the period beyond maturity.
  • Nomination facility is available in the Scheme.
  • No Income-tax/Wealth Tax rebate and/or exemption is admissible under the scheme.

Monthly Income Scheme (MIS) and Senior Citizen Saving Scheme (SCSS) are the best for Senior Citizens who desire monthly/quarterly interest. Invest in MIS / SCSS and transfer interest into RD account through SB account through written request and earn a combined interest of 10.5 % (approx.). This is the safest investment option for the Senior Citizens.

15 Years Public Provident Fund

  • Ideal investment option for both salaried as well as self employed classes.
  • Non-Resident Indians (NRIs) not eligible.
  • Minimum of Rs.500/- and maximum of Rs. 1,00,000/- in a financial year.
  • At least one deposit in a financial year.
  • Qualified for IT Rebate under section 88 of IT Act.
  • Rate of interest 8.8% per annum with effect from 01.04.2012.
  • Loan facility available from 3rd financial year upto 5th financial year.
  • Withdrawal permitted from 6th financial year.
  • Free from court attachment.
  • Interest completely tax free.
  • Term extendible in multiples of 5 years.
  • An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons.

Kisan Vikas Patra

The Union Finance Minister Shri Arun Jaitley launched Kisan Vikas Patra(KVP) in the presence of Shri Ravi Shankar Prasad, Union Minister of Communication and IT. The Secretary, Department of Posts Ms.Kavery Banerjee along with all seniors officers of the Department graced the occasion.

Salient Features of relaunched Kisan Vikas Patra: 

  • Amount Invested doubles in 100 months ( 8 years & 4 months).

  • Available in denominations of Rs 1,000, 5000, 10,000 and Rs 50,000. 

  • Minimum deposit Rs 1000/-and no maximum limit. 

  • Certificate can be purchased by an adult for himself or on behalf of a minor or by two adults. 

  • KVP can be purchased from any Departmental Post office. 

  • Facility of nomination is available. 

  • Certificate can be transferred from one person to another and from one post office to another. 

  • Certificate can be encashed after 2 & 1/2 years from the date of issue.

 The Department of Posts has issued SB Order No 12/2014 dated 17-11-2014 with notification issued by the Ministry of Finance.

National Savings Certificates

  • An adult for himself/on behalf of a minor/a minor, a registered trust, two adults jointly and a Hindu Undivided Family can purchase.
  • Scheme specially designed for Government employees, Businessmen and other salaried classes who are IT assesses.
  • Maturity period revised to 5 years from 6 years wef 01.12.2011.
  • Maturity value of 5 yr NSC (VIII) Issue shall be Rs.152.35 for denomination of Rs.100 and proportionate rate for any other denomination.
  • Rate of interest 8.6% per annum with effect from 01.04.2012.
  • No maximum limit for investment.
  • No tax deduction at source.
  • Certificates can be kept as collateral security to get loan from banks.
  • Investments including accrued interest qualifies for tax rebate under Sec. 88 of I.T. Act.

10 Year National Savings Certificates(IX Issue)

  • A new scheme called “10 Year National Savings Certificates (IX-Issue)” was introduced wef 01.12.2011
  • An adult for himself/on behalf of a minor/a minor, a registered trust, two adults jointly and a Hindu Undivided Family can purchase.
  • Maturity value of 10 yr NSC (IX) Issue shall be Rs.238.87 for denomination of Rs.100 and proportionate rate for any other denomination.
  • No maximum limit for investment.
  • Interest on these certificates shall be liable to tax under the Income-Tax Act, 1961 (43 of 1961) on the basis of annual accrual specified in rule15, but no tax shall be deducted at the time of payment of discharge value.

Sukanya Samriddhi Account (Launched on 22.01.2015)

  • A legal Guardian/Natural Guardian can open account in the name of Girl Child.
  • A Guardian can open only one account in the name of one girl child and maximum two accounts in the name of two different Girl Children.
  • Guardian will be called as "Depositor" and Girl Child will be called as "Account Holder".
  • Account can be opened up to the age of 10 years only from the date of birth. For initial operations of scheme, one year grace has been given. Therefore, Girl Child who is born on or after 02.12.2003 can open account.
  • KYC Documents of Depositer (Guardian) as per SB order No. 14/2012 (Master Circular 1) circulated on 09.10.2012 and Birth Cerficate of Account Holder (Girl Child) are mandatory to be taken.
  • Nomination is not allowed in these accounts.
  • Minimum Amount for opening of account is Rs. 1000/- and subsequent deposit should be in multiple of Rs. 100/-.
  • Maximum Amount which can be deposited is Rs. 1,50,000/- in a financial year.
  • No limit on number of deposits either in a month or in a financial year (just like a savings account).
  • If minimum Rs. 1000/- is not deposited in a financial year, account will become discontinued (like PPF) and can be revived with a penalty of Rs. 50/- per year with minimum amount required for deposit for that year.
  • Mode of deposit can be Cash/Cheque/Draft and in case of cheque/draft, date of credit of cheque/draft amount into Government Account will be the date of credit.
  • Interest rate will be 9.1% for the financial year 2014-15. It will be calculated on yearly basis and credited into account i.e. yearly compounded up to completion of 14 years from date of opening.
  • Partial withdrawal, maximum upto 50% of the balance standing at the end of the preceding financial year can be taken after Account Holder is attaining age of 18 years.
  • Account can be closed after completion of 21 years.
  • If account is not closed after maturity, balance will continue to earn interest as specified for the scheme from time to time.
  • Normal premature closure will be allowed after completion of 18 years provided that girl is married. No reduction in the interest. Interest will be paid till completion of month preceeding the month of closure. Month means, Sukanya Samriddhi Account month not a calendar month.
  • In case of Premature (on account of death of the account holder), balance amount will be paid to the guardian with interest till the month preceding the month of premature closure.

For all the above mentioned savings schemes, KYC (Know Your Customer) norms should be followed from time to time.


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