Post Office Schemes in India-Who should invest?

Post Office schemes in IndiaPost Office Schemes in India-Who should invest?

If you are looking for a safe investment option, invest in Post Office Schemes in India. Post office schemes in India include Public Provident Fund, Term deposits, Recurring Deposits and National Saving Certificates. This article is based on request from Maithili on “Suggest a topic” option to write an article about Post office schemes, its features and latest updates on this.

Post office schemes in India

Indian post office offers small saving schemes (Government enterprise) which have been popular as they provide assured returns along with protection of the capital.

Also read: National Saving Certificates – Complete guide

Complete guide on post office schemes in India

Public Provident fund:

  • Investment up to Rs 1,00,000 per annum qualifies for IT Rebate under section 80 C of Income Tax Act.
  • Current interest rate is 8.70% per annum.
  • Tenure – 15 years
  • Loan facility on PPF account is available from 3rd financial year up to a 5th financial year. The rate of interest charged on loan shall be 2% per annum more than the PPF interest.
  • Withdrawal permitted from 6th financial year.
  • Non-Resident Indians (NRIs) are not eligible.
  • An individual cannot invest on behalf of a HUF (Hindu Undivided Family) or Association of persons.
  • Minimum investment is Rs 500 and maximum is Rs 100,000
  • Interest earned is tax free
  • To whom this scheme is suitable: This is best suitable for those who want to get tax exemption u/s 80C up to Rs 1 Lakh as well as those who want to accumulate funds for retirement purpose thereby earning safe, highest and tax free returns.

Monthly Income scheme (MIS): Safe & assured returns who are looking for regular monthly income.

  • Good investment option who is looking for monthly fixed income
  • Rate of interest is 8.40%.
  • Maturity Period – 5 years
  • Auto credit facility to SB Account.

National Saving certificate: NSC’s are generally used for tax saving purpose and to get regular fixed income.

  • No TDS deducted by the post office. However you need to declare this as “Interest income” and pay necessary income tax based on your individual tax slab.
  • Premature withdrawal not available. However one reader commented saying Post office person has indicated that this can be withdrawn. I do not know how this could be specific to a post office.
  • You can keep these NSC’s with banks as collateral security for loans
  • Investment up to INR 1,00,000/- per annum qualifies for IT Rebate under section 80C of the Income tax act.
  • Available in 5 years and 10 year options. Rate of interest 8.50% p.a. and 8.80% p.a. respectively.
  • Minimum investment is Rs 100 and no maximum limit. NSC’s are available in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000.
  • Best Suitable to: While investment in NSC qualifies for a tax rebate u/s 80C, this could be used as one of the best investment options for retirement purpose by purchasing NSC’s every month and re-investing at maturity.

Senior citizens saving schemes (SCSS)

  • The account may be opened by an individual, who has attained age of 60 years or above on the date of the opening of the account.
  • Who has attained the age 55 years or more but less than 60 years and has retired under a Voluntary Retirement Scheme or a Special Voluntary Retirement Scheme on the date of the opening of the account within three months from the date of retirement.
  • No age limit for the retired personnel of Defense services provided they fulfill other specified conditions.
  • The account may be opened in individual capacity or jointly with spouse.
  • NRIs and HUF are not eligible to open an account.
  • Minimum is Rs 1,000 and Maximum limit of Rs 15 lakhs
  • Premature withdrawal is available after 1 year, but 1.5% would be deducted on deposit amount
  • Premature withdrawal is available after 2 years, but 1% would be deducted on deposit amount
  • Premature closure allowed after three years without any deduction.
  • In case of death of the depositor before maturity, the account shall be closed and deposit refunded without any deduction along with interest.
  • Interest @ 9.20% per year from the date of deposit on a quarterly basis.
  • Nomination facility is available in the Scheme.
  • Investment under this qualifies for 80C IT benefits.
  • Good and safe investment choice for senior citizens.

Time deposits:

  • Any individual (a single adult or two adults jointly) can open Time deposit account.
  • Time deposit account can be opened for 1 Year, 2 Year, 3 Year and 5 Year
  • In case of premature closure from 6 months to 1 year of deposit, simple interest would be paid. Beyond one year, interest would be paid at one percent less than the term deposit interest rates.
  • Interest rates are 8.20%, 8.20%, 8.30%, 8.40% for 1,2,3 & 5 years TD account. Interest would be compounded quarterly.
  • Investment of 5  year term deposit qualifies for 80C deduction up to Rs 1 Lakh.

Also read: Is Post office term deposit is better than Bank FD?

Recurring deposit:

  • Any individual (a single adult or two adults jointly) can open an account.
  • Advance Deposits earn rebate.
  • Rate of interest is 8.30%
  • Maturity value of a 5 Years RD account opened on or after 1.4.2013 with monthly deposit of INR.10/- shall be INR.744.53.
  • Part withdrawal facility available.
  • Premature closure allowed after three years.
  • Four defaults are allowed. Defaults can be paid within 2 months.
  • Best suitable for every individual who are looking to open RD account. Several banks offer lesser interest rates comparing to Post office RD, hence you can choose this as alternate option.

Saving account:

  • Any individual can open an account.
  • Cheque facility available. 
  • Rate of interest 4% per annum

Readers, what is your opinion about these post office schemes in India? Please give your comments

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Post office schemes in India

Suresh KP


  1. Respected sir.
    I m investing 3500/- per month in post office R. D. As interest rate of 8.4% my meturity amount is 261000/- approx.
    I want to know any tax will be deducted on my meturity amount or not. As I know, if I earned 10000 /- is early as interest then 10% will be deducted from interested earned amount.

    If tax is applicable for my RD then how much tax will be deducted from my meturity amount.

    2nd is I am working in defence. So my annual income is not comes under taxable income. When it comes then my tax is automatically deduct from my defence Salery outhority.

    PLease send me reply on my mail. I. D

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