Small Saving Scheme that you must know

Are you looking for investment schemes that could exempt you from tax and at the same time would provide handsome returns ?If yes, then small saving scheme is a good and an attractive choice. Started and operated by 1.54 Lacs of postal offices in the country, it is one of the highest preferred investment strategy by the rural as well as urban minds.  Small savings scheme began to offer safe and sound investment options to the public . Following is a brief introduction of the various financial services of the Indian postal department

1. PPF
If you are a salaried individual and aspire to reap long term investment profits, particularly after retirement, then the Public Provident Fund (ppf) remains the best savings option for you. This scheme is designed for a period of 15 years which can extended for an additional set of 5 years later. The minimum deposit entails 500 INR per month and the yearly deposit is 1 LAC. The interest rate is 8.8% according to 1/4/12. Moreover, the interest is completely tax-free. Although NRIs are not applicable for it. But ,for the salaried and self employed people, it is indeed an ideal investment option.

2. Monthly Income Scheme (MIS)
It is a fixed investment option that has a duration of 5 years coupled with the facility of monthly interest payment. Suitable for the retired and the ones who need a regular payment option, it can be opened by any adult or a minor supervised by a guardian. In addition, 1-2 or 2-3 adults can also open joint accounts. The maturity period is 5 years and it offers an interest rate of 8.5%. The maximum and minimum investment amount for a single account is 4.50 lacs and 1500 INR respectively. For a joint account, it is 9 lacs. Similar to PPF, no NRI is eligible for this strategy. There is no tax deduction and no tax rebate either.

3.National Savings Certificate
It is an ideal option for the people who’d want to go for tax saving instruments and expect big after tax returns. It can be purchased by any adult. In the 5 year plan mode, with the present rate at 8.4%, you’d get 16% interest rate. And for the people who gear up for 10 year strategy, you would get an interest rate of 8.9% per annum. The best part about this strategy is that, that the minimum investment entails of merely Rs.100 and the maximum amount is, well, nothing. That means you can invest as much as you want but keep in mind that an investment up to Rs 1 lac qualifies for Income tax rebate.

4. Senior Citizen’s Savings scheme
The people who age 60 years or more and 55 years or more can open it by either individually or jointly with a spouse. However, defense personnels are debarred from this rule only if they qualify the other conditions.  Minimum and maximum deposit is Rs 1000 and Rs 15 lacs for a tenure of 5 years that can be extended to a further period of 3 years. The interest rate is at 9.3%. If the interest amount is more than 10,000/annum ,then the TDS is deducted at the source on interest. NRIS are not eligible.

5. Post Office Savings Account
It caters to the need of regular deposits and withdrawals. Any individual can open it. The rate of interest is 4.0% per year and it is interest tax free. Cheque facility is available. The minimum amount through cheque is Rs 500 and without it, is Rs 50. Maximum balance is Rs 1 lac in a single account and Rs 2 lacs in the case of joint accounts.

6. Post Office Time deposit Scheme
It is a plan that serves as a fixed deposit option for a period ranging from 1, 2, 3 to 5 years. The interest rate is paid annually however, the compounding is done quarterly.

Period Rate of interest
One year 8.2%
Two years 8.3%
Three years 8.4%
Five years 8.5%

Any individual or 2 adults jointly can open an account. The minimum deposit limit is 200 INR and there is no limit for the maximum amount. However, people investing money up to 1 lac are subjected to tax rebate. Moreover, the interest income is also taxable. There is also some difference between Post Office FD and Mutual funds that you must know!

Apart from these, following are the other financial facilities by the postal department :

Postal Life Insurance or PLI that serves all the government employs only.

Recurring Deposit account comes under the monthly investment category. It is designed for a tenure of 5 years and offers profitable returns.
National Pension Scheme (NPS) :National Pension system or National Pension scheme (NPS) is regulated by the Pension Fund Regulatory Development Authority (PFRDA). The purpose of the scheme is to provide security to the old age investor’s investments by offering returns according to the current market.

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Thus, we see that there is a variety of investment options available in the Indian Postal Services. The best part about it is that, that it caters to the need of both the rural, semi-rural and urban classes, is secure, risk free and offers great returns. Hence it is also one of the widely preffered choices amongst people.


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