Which post office investment scheme should you choose? Details here
What's the story
The Indian Department of Posts offers a variety of investment schemes to people. Retired and senior citizens form a major section of the subscribers. From Public Provident Funds (PPF) to Senior Citizen Savings Schemes to deposits that can save you taxes, the initiatives come with different benefits. So which scheme should you choose? Take a look at the different options here.
Savings scheme
Post Office Savings Scheme
The Post Office Savings Scheme offers an annual interest of 4%, is transferable from one post office to another, and comes with nomination and ATM facilities. A minimum balance of Rs. 50 has to be maintained in a non-cheque facility. For cheque facility, the minimum balance is Rs. 500. At least one transaction in three financial years is mandatory.
Recurring deposit
2.5-Year Post Office Recurring Deposit Account
This comes with a 6.9% annual interest rate, and unlike the earlier, can be opened by both cash and cheque. It is transferable too and nomination facility is available. After a year, one withdrawal of up to 50% of the balance is allowed. In case of default, the depositor has to pay the monthly default amount plus a fee along with the deposit.
Time deposit
Post Office Time Deposit Account
In this, the interest is paid annually but calculated quarterly. For one-year deposits, the rate is 6.6%, for two years, it is 6.7%, 6.9% for three years and 7.4% for five years. There is no maximum deposit limit and the account is transferable. Five-year deposits qualify for benefits under Section 80C of the Income Tax Act and can help save taxes.
Monthly income
Post Office Monthly Income Scheme Account
Here, depositors can get an assured amount monthly as interest. The annual rate is 7.3%. An account can be opened with both cash and cheque. It is transferable and offers nomination facility. Individuals can open any number of accounts subject to maximum investment limit. Premature encashing is allowed after a year, but there's a 2% deduction if done before three years and 1% afterwards.
Senior citizens
Senior Citizens Savings Scheme
This can be opened only by citizens above 60 or retirees above 55, provided it's done within a month of receipt of retirement benefits. It can be opened by cash for less than Rs. 1L, and cheque for more. Premature withdrawal is allowed after a year with a 1.5% deduction, and 1% after two years. If interest is over Rs. 10,000, TDS is deducted.
PPF
15-year Public Provident Fund Account
The minimum opening balance is Rs. 100. A minimum of Rs. 500 and maximum Rs. 1.5L can be deposited in a year. Joint account facility isn't available. The 15-year maturity period can be extended, each time for five years. Premature closure isn't allowed. Deposits qualify for deductions under Section 80C and interest is completely tax-free too. Withdrawal is allowed from the seventh year.