Indian Post Office offers several types of investment schemes that provide good returns as well as tax benefits under the Section 80C of the Indian Income Tax Act, where exemption up to ₹ 1, 50,000 is allowed.
These investment options offered by the post office are also known as small savings schemes. The schemers are best known for their sovereign guarantee, as they are backed by the central government. Some of these schemes are NSC, SCSS, Post Office Time Deposit, Post Office Recurring Deposit, Post Office Monthly Income, Sukanya Samriddhi Yojana, National Savings Certificate and Public Provident Fund (PPF).
| Scheme | Interest rate (%) |
| Public Provident Fund (PPF) | 7.1 |
| Post Office Savings Account | 4 |
| Post Office Monthly Income Scheme | 6.6 |
| Sukanya Samriddhi Yojana | 7.6 |
| National Savings Certificate (NSC) | 6.8 |
Here are some of the small savings schemes explained:
Public Provident Fund (PPF)
PPF is one of the most preferable schemes offered by Indian post, the scheme comes with a lock-in period of 15 years. However, partial withdrawal is also allowed after 5 years.
This scheme is considered best as you don’t need a huge amount to start your investment, the minimum deposit allowed under the PPF scheme is ₹ 500. In the worst case even if you don’t have enough money to continue your investment, PPF requires only ₹ 500 yearly deposit to keep the account active.
Post Office Savings Account
The post office savings account not only keeps your money safe but also offers good interest on your savings. The account can be opened against a minimum amount of ₹ 500. Same as PPF account to keep the account active the investor is required to keep a minimum balance of the same amount. In case one fails to maintain the required balance the investor needs to pay a maintenance fee of ₹ 100 at the end of the financial year. The current interest rate offered against the post office savings account is 4% per annum.
Post Office Monthly Income Scheme
As the name suggests, POMIS offers monthly interest to the investors. For this scheme, the investment can be made individually as well as jointly. The scheme even allows investing in minor’s names. The tenure period of POMIS is of five years where the interest is auto-credited into the investor’s savings account at the post office. The premature withdrawal is also allowed but after a lock-in period of one year by paying some penalty amount.
Sukanya Samriddhi Yojana (SSY)
This post office scheme comes under the ‘Beti Bachao Beti Padhao’ campaign of the Indian government. The major benefit which this scheme offers is- the investment amount, the interest earned and the maturity amount all are totally tax-exempt. To avail, the benefits, parents or legal guardians of a girl child can open an account under this scheme in any near post office.
The maturity amount is payable after the completion of 21 years. The investor needs to pay a penalty if the minimum amount is not deposited at the end of a financial year. The account can be opened against the minimum investment of ₹ 250, whereas the maximum investment allowed is up to ₹ 1, 50,000 in one financial year.
National Savings Certificate (NSC)
One can start an investment in NSC with a minimum deposit of ₹ 100 and in multiples of ₹ 100. NSC allows you to make investments individually, jointly and even for your minors. The lock-in period for this scheme is 5 years.
Senior Citizens Savings Scheme Account
This scheme is designed especially for the senior citizens of our country to earn regular interest on their money. The scheme has a lock-in period of five years. However, premature withdrawal is allowed after one year but the investor needs to pay a penalty for it. The maximum investment allowed under this scheme is ₹ 15 lakhs.
