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Post Office Savings Schemes - All You Need To Know

Indian Post offers a plethora of investment schemes for a variety of investors, including individuals, a girl child. All the Post office investment schemes guarantee returns as the Government of India backs it. Moreover, few post office investment schemes offer tax benefits up to INR 1.5 lakhs upon investment. This article covers the different post office savings schemes and the benefits of post office schemes in detail.

Types Of Post Office Savings Schemes

1. Post Office Savings Account

The post office savings account is one of the schemes that the Post Office offers. This post office savings scheme is available throughout India. Furthermore, the post office savings account offers a fixed interest rate on the deposit amount. Hence, the post office saving scheme is suitable for individuals seeking to earn fixed returns from their investments. One can open a savings account in a post office for as low as INR 20.

This post office saving scheme is quite popular in the rural parts of India. The Central Government decides the rate of interest for the post office savings account. Often, the rates are similar to the bank savings account. The post office saving account has an interest rate around 4%, and the interest is calculated every month. Also, as per the Income Tax regulations, interest amount less than INR 50,000 per annum is tax-free in the hands of the depositor.

2. Post Office Recurring Deposit Account (RD)

5 Year Post Office Recurring Deposit (PORD) Account allows investors to save on a monthly basis. The interest is compounded on a quarterly basis. This post office small savings scheme has a total of 60 monthly instalments. Post Office RD is suitable for individuals who wish to save through regular monthly deposits. The post office savings interest rates for this scheme is 5.8% per annum. Investors can estimate their returns from RD investments using the RD calculator.

The minimum amount of investment is INR 10, with no cap on the maximum amount. All resident Indian nationals above the age of 18 years can open an account with the post office. Also, minors who are ten years old can open and operate the account jointly with their guardian. Furthermore, parents or guardians can open the account on behalf of their minor children.

3. Post Office Time Deposit Account (TD)

Post Office Time Deposit (POTD) Account is one of the most popular post office savings schemes. The interest rates are determined by the Finance Ministry every quarter. The rates are based on the yield of government securities and spread over the government sector yield.

Investments in a post office fixed deposit account have a minimum requirement of INR 1,000. One can open a TD account for any of the following tenures; one year, two years, three years and five years. Also, depositors can opt for reinvestment of the interest. However, this option is not available for one year TD. Additionally, one can also choose to redirect the interest to a five-year recurring deposit scheme. Time deposits can also be transferred from one post office to the other. Also upon maturity, if the depositor doesn’t withdraw, then the amount will be reinvested for the initial tenure of the deposit at the new applicable interest rates.

4. Post Office Monthly Income Scheme Account (MIS)

POMIS is a low-risk investment scheme that offers regular monthly income to the depositors in interest payments. The Government of India backs POMIS. The interest rates are announced every quarter. The current rate of interest is 6.60% (for January – March 2021 quarter). POMIS has a lock-in period of five years. Upon maturity, the depositor can choose to either withdraw or reinvest the entire amount into the scheme.

The minimum amount for POMIS is INR 1,500, and the maximum limit is INR 4,50,000 per individual. However, for joint holding, the maximum limit is INR 9,00,000. Also, one can transfer their POMIS account from one post office to another. Furthermore, this post office savings scheme allows premature withdrawals post one year of account opening. However, these premature withdrawals have penalties.

5. Senior Citizen Savings Scheme (SCSS)

Senior Citizens Savings Scheme (SCSS) is a post office savings scheme suitable for senior citizens. The Government of India backs it. The post office saving scheme offers regular income as well as safety for depositors. The regular income is in the form of interest payments. The interest is calculated every quarter and credited to the investor’s account. The interest rates are revised every quarter. The SCSS interest rate for the current quarter is 7.40% (January – March 2021).

The minimum investment amount is INR 1,000 and a maximum of INR 15,00,000. This post office savings scheme has a five year lock-in period. Additionally, investors have an option to extend the scheme duration for another three years. Investments into SCSS qualify for tax exemption under Section 80C. However, the interest income is taxable. Also, TDS is deducted if the interest is more than INR 50,000.

Furthermore, SCSS allows investors to withdraw their investments prematurely. However, these withdrawals are subject to certain penalties. The penalty varies on the basis of the tenure of the account. Only after one year of account opening, the investors can prematurely withdraw their investments. For withdrawals within two years, a penalty of 1.5% on the investment amount is charged.

6. Public Provident Fund Account (PPF)

Public Provident Fund (PPF) is a post office savings scheme launched by the National Savings Institute in 1968. The scheme guarantees returns as the Government of India backs it. For the current quarter (January 2021-March 2021), the PPF interest rate is 7.1%. The Ministry of Finance revises the PPF interest rates every quarter. The scheme pays interest annually on 31st March. However, the interest is calculated every month on the minimum balance from 5th to 30th of every month.

PPF investments have a fixed tenure of 15 years. Once invested, the investment is locked-in for a tenure of 15 years. However, investors can do partial withdrawal of their investments. Investors can withdraw at the end of 5 years. They can withdraw only 50% of the balance of the preceding year or end of 4th year. Investors can opt for premature closure of their PPF account with a penalty of 1%. However, the premature closure of PPF accounts is only allowed in certain conditions.  One can also take a loan against their PPF investments between the 3rd and 5th year, and the terms of the loan are subject to change from time to time.

7. National Savings Certificates (NSC)

National Savings Certificate (NSC) is a small savings scheme that encourages savings among low income and mid-income groups. This post office scheme is a Government of India initiative, and hence the returns are guaranteed. The interest for the current quarter (January 2021-March 2021) is 6.8%. This fixed income savings scheme has a tenure of 5 years. Hence the lock-in period is also five years. The interest is automatically reinvested back into the scheme. The investors will receive the investment and interest amount upon maturity.

Investors can invest in NSC with an amount as low as INR 100. Only eligible investors can invest in NSC. Resident Indians are the only category who are eligible to invest in NSC. HUFs, NRIs and trusts cannot invest in NSC. One cannot withdraw their NSC investment prematurely except in case of death of the investor. However, one can always take a loan against their NSC investment.

8. Kisan Vikas Patra (KVP)

Kisan Vikas Patra (KVP) is a small savings scheme introduced for farmers. However, the scheme is extended to all residents of India. This post office savings plan guarantees income in the form of interest. The scheme pays a fixed interest of 6.9% (January 2021-March 2021) per annum. The interest rates are revised every quarter—investment in this scheme doubles in 124 months (10 years and two months).

The scheme has a lock-in period of 30 months, and investors cannot withdraw their investments during this time period. However, post the lock-in period, investors can withdraw their investments in intervals of 6 months. Investment in KVP is not eligible for tax deduction. Moreover, the interest income is taxable too. To estimate their tax liability, investors can use the Income Tax Calculator.

9. Sukanya Samriddhi Accounts (SSA)

Sukanya Samriddhi Yojana (SSY) is a Government of India initiative that supports the ‘Beti Bachao, Beti Padhao’ campaign. This post office savings scheme was launched in 2015 to promote girl child education and marriage. It is a fixed income scheme that guarantees returns in the form of interest. For the current quarter (January 2021 – March 2021), the interest rate is 7.6%. The interest is revised on a quarterly basis. To estimate the returns that one can earn from this scheme, they can use the Sukanya Samriddhi Yojana Calculator. Parents or guardians of a girl child can invest in this scheme on behalf of the girl before 10. Only resident Indians can invest in this scheme. The scheme matures when the girl turns the age of 21.

The scheme allows investments only until the age of 15. The minimum investment is INR 250, and the maximum investment is INR 1,50,000 per annum. The scheme allows only one account per girl child and two accounts per family. In the case of twins, the number of accounts allowed is three. No premature withdrawals are allowed until the scheme matures. However, the few exceptions are when the girl unfortunately dies or is fighting a life-threatening disease. At the age of 18, 50% of the amount can be withdrawn for the purpose of higher education. Investment in SSY qualifies for tax exemption under Section 80C of the Income Tax Act, 1961.

Advantages Of Investing In Post Office Investment Schemes

Following are the benefits of a post office saving scheme.

1. Hassle-free procedure and documentation

Post Office saving schemes are easy to invest and enroll in. The schemes have limited documentation and proper procedures. The investment options are suitable for both rural and urban investors. Also, the Government of India backs these investment options. Hence are safe.

2. Wide range of investment options

The post office offers a wide range of investment options for investors to choose from. Every scheme is unique with its features and benefits. They are hence allowing the investors to choose the best option that suits their investment requirements.

3. Interest rates

Interest rates of the post office schemes are in the range of 4% to 7.60%. These investments are also risk-free as the government backs them. Therefore, investors need not worry about their investments.

4. Long term investment options

The post office also offers long term investment options like PPF and SSY. These schemes are suitable for investors with a long term investment horizon. They help in good financial, retirement and pension planning.

5. Tax exemption

Most post office investment schemes qualify for tax exemption under Section 80C. For example, schemes like SCSS, SSY and PPF. Also, for some schemes, the interest is tax-free as well.


The post office offers multiple schemes with varying lock-in periods and interest rates. Therefore, the returns vary based on the scheme.

Also read- Best Investment Plans In India

Learn Everything About Post Office Savings Schemes

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.

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