Everything You Must Know About Post Office Savings Account
Published On Nov 22, 2021
Table of Contents
A Post Office Savings Account is similar in many ways to a regular savings account. It is considered to be a highly secure instrument to deposit funds into and offers the option of full or partial liquidation of funds at very short notice in case the need arises. These accounts generally offer a guaranteed return on investment and are ideal for senior citizens and people who are looking to earn a regular income without exposure to risk.
In order to open a Post Office Savings Account, you need to be an Indian and an adult. A minor will have to be a minimum of 10 years to be eligible for opening a Post Office Savings Account. For opening a joint post office savings account, 2 or 3 individuals are required.
How to Open a Post Office Savings Account?
Follow these simple steps to open a post office savings account.
- Visit your nearest post office or the official website of India Post and get the application form.
- Fill the form with appropriate information
- Furnish the relevant documents, and a passport size photograph.
- Pay a deposit amount, which cannot be lower than Rs.20.
- If you want to get a post office savings account without a cheque book, you will need to pay a deposit amount of at least Rs.50.
- Single account holders can deposit a maximum of Rs one lakh while joint account holders can deposit a maximum of Rs two lakhs. One of the main features of a Post Office savings account is that there is no lock-in or maturity period.
Opening an account of this kind is relatively hassle-free, since one can walk into any post office, complete the formalities with the clerk, and open an account immediately.
Eligibility to Open Post Office Savings Account
The following individuals are eligible to open a Post Office savings account
- Minors with a minimum age of ten years
- A guardian on behalf of a minor
- A person of unsound mind
- Two or three adults can open a joint account
- Group Accounts, Institutional Accounts and other accounts like Security Deposit Accounts & Official Capacity Accounts are not permissible.
Post Office Savings Accounts Interest Rate
Post Office savings account interest rate is decided by the Central Government from time to time and is generally between 3% to 4%. Interest is calculated on monthly balances and credited annually. Post Office Savings Accounts earn a fixed rate of interest through the year, subject to change from time to time, as declared.
Post Office Savings Account Withdrawals
In a Post Office savings account the amount deposited can be withdrawn at any time as per the depositor’s needs. The withdrawal is, however, subject to the maintenance of a minimum balance of Rs. 50 in a simple account and Rs. 500 for accounts with cheque facility.
Features of Post Office Savings Account
The main features of a Post Office savings account are:
- You can choose to close the account at any time of his or her choosing
- Minors above the age of 10 years can operate their accounts
- To keep the account active at least one deposit or withdrawal must be done once in 3 years
- The account can be opened only using cash
- Nomination facility is available at the time of opening the account and after opening the account
- Interest earned is tax free up to Rs 10,000 per year
- Income tax relief is available on the amount of interest under the provisions of section 80L of the Income Tax Act.
- The account can be transferred from one post office to another
- Single accounts can be converted to joint accounts and vice versa
- Deposits and withdrawals can be done through any electronic mode in CBS Post offices.
- Transactions can be done via ATMs
Post Office Savings Account Benefits
Customers who wish to open these accounts have access to cheque and ATM facilities. Some attractive Benefits of Post Office Savings Accounts have been listed below:
- Cheque facility: Cheque facility is available and can be requested for existing accounts as well.
- ATM/Debit card: For those account holders who have maintained the prescribed minimum balance on the day of issuance of the debit card, CBS Post Offices can grant ATM/Debit cards.
- Minor Accounts: Post Office Savings Account is available to minors. For minors below the age of 10, an account can be opened in their name, but the parent or guardian will be given rights to operate the account on their behalf. Minors of 10 years and above can operate the account on their own.
- Portability: If you shift your residence or are not happy with the services of the post office branch or for any other reason, you can shift your Post Office Savings Account to a branch of your choice. Only one account can be opened in one post office.
- Nomination: The facility to nominate someone is made available under these accounts at the time of opening the account. The account holder can also choose to nominate a person to receive the proceeds of this account after their demise at any time.
- Joint Holdings: Two or three adults are allowed to hold an account together under the joint account facility. A single account can be converted to a joint account and vice versa.
- Tax Exemptions: Two or three adults are allowed to hold an account together under the joint account facility. A single account can be converted to a joint account and vice versa.
- Electronic Facilities: Customers can make withdrawals and deposits through any electronic mode in CBS Post offices.
- Long Period For Inactivity: In order to keep the account active you only need to carry out one transaction of a deposit or withdrawal in 3 financial years. The account will not be deemed inactive unless there are no transactions for 3 financial years.
Only one account can be opened as a single account by the individual. There is no limit on the maximum amount that can be deposited in a post office savings account. It is also eligible for tax exemption for interest of up to Rs.10,000 earned in a financial year (for all savings accounts combined) under the Income Tax Act 80TTA.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.