The post office – under India Post – offers several kinds of accounts for making investment today. India Post, which has a network of more than 1.55 lakh post offices across the country, offers a variety of banking and remittance services, other than mailing services. The post office offers an investment return – or interest rate per annum – ranging from 4 per cent to 7.4 per cent in five of those savings schemes. The various types of accounts you can open at the post office include savings account, recurring deposit account, post office time deposit (TD) account, post office monthly income scheme (MIS) and Kisan Vikas Patra (KVP), among others.
|Post office savings scheme||Interest rate||Maturity period||Minimum amount for opening account||Maximum amount permitted|
|Savings account||4%||–||Rs 20||–|
|Monthly income scheme (MIS)||7.3%||5 years||Rs 1,500||Rs 4.5 lakh|
|Time deposit (TD)||6.6% for 1 year; 6.7% for 2 years; 6.9% for 3 years; 7.4 per cent for 5 years||1-5 years||Rs 200||No limit|
|Recurring deposit (RD)||6.9%||5 years||Rs 10 per month||No limit|
|Kisan Vikas Patra (KVP)||7.3%||118 months||Rs 1,000||No limit|
Other than the savings account, which does not have a defined maturity period, the post office accounts have a maturity period ranging from one year to nine years and 10 months. Here’s a comparison among five post office savings schemes – savings account, recurring deposit, time deposit, monthly income scheme and KVP – on the basis of important factors such as interest rate and minimum/maximum investment limits.
Post office monthly income scheme (MIS)
The post office monthly income scheme offers an annual return of 7.3 per cent. One can enter the post office monthly income scheme with a minimum amount of Rs 1,500. The scheme allows investment in multiples of Rs 1,500. The maximum amount permitted for investment is Rs 4.5 lakh in case of a single account and Rs 9 lakh for joint a account. The MIS comes with a maturity period of five years, according to India Post’s website – indiapost.gov.in.
Post office Kisan Vikas Patra (KVP) scheme
The Kisan Vikas Patra account provides an interest rate of 7.3 per cent. The account can be opened with a minimum investment of Rs 1,000. Deposits can be made in multiples of Rs 1,000. There is no upper limit prescribed by India Post on the KVP scheme. The amount invested in the KVP scheme doubles in a period of 118 months (9 years and 10 months), according to the India Post website. The certificate can be encashed after a period of two-and-a-half years from the date of issue, according to India Post.
Post office savings account
India Post provides an annual return of 4 per cent on savings account deposits. A post office savings account, which comes with the ATM facility, can be opened against a cash payment of a minimum Rs 20. The interest earned through the savings account is tax-free up to Rs 10,000 in a financial year, according to India Post. The savings account comes with optional features such as cheque book and nomination facilities, according to India Post.
Post office recurring deposit account
The post office RD account, known as the five-year post office recurring deposit account, offers an interest rate of 6.9 per cent. The recurring deposit can be set up with a minimum amount of Rs 10 per month. In a recurring deposit, the investor deposits a fixed amount of money in regular intervals. Contribution in the multiples of Rs 5 can be chosen to invest in the five-year RD account. The interest rate of 6.9 per cent is compounded on a quarterly basis, which means an RD of Rs 10 – in which the account holder pays Rs 10 every month – provides a return of Rs 717.43 in the maturity period of five years, according to India Post.
Post office time deposit (TD) account
The post office provides an interest rate of 6.6-7.4 per cent on time deposit accounts. The time deposit or TD account allows a maturity period ranging from one year to five years. The rate of return on investment depends on the maturity period selected by the investor. The interest is calculated on a quarterly basis and paid on an annual basis, according to India Post. The TD account can be opened with a minimum amount of Rs 200. Any amount in the multiple of Rs 200 can be invested in the scheme. The post office TD account has no stipulated maximum investment limit. Out of the four maturity periods available, the five-year option qualifies for the benefit of Section 80C of the Income Tax Act. Section 80C of the Income Tax Act allows deduction of Rs 1.5 lakh from total income in a financial year. That means one can claim reduction up to Rs 1.5 lakh on total taxable income in a year.