Indian Post offers a several types of schemes for a variety of investors, including individuals, a girl child, senior citizen, farmers etc. All the post office scheme guarantee returns as the Government of India backs. This blog covers the comparison among all types of schemes offered by Indian post office.
“Never depend on single income. Make investment to create a second source.” – Warren Buffett
List of contents:
- Feature of post office scheme
- Importance of post office scheme
- Comparison of the various post office saving scheme available
- Advantages of Post office schemes
- Disadvantages of Post office schemes
- Conclusion
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Feature of post office scheme
Post office schemes in India offer some of the key features:
- Compound Interest: Most of the post office schemes offer compound interest, which means that the interest earned on the investment is added to the principal amount, and the interest is calculated on the total amount. This helps in increasing the effective returns on the investment over time.
- Special Schemes for Senior Citizens and Girls: Post office schemes also offer special schemes for senior citizens, such as the Senior Citizen Savings Scheme (SCSS) and the Post Office Monthly Income Scheme (POMIS) and for girls Sukanya samriddhi scheme (sukanya samriddhi yojana) which offer attractive interest rates and other benefits
- Flexibility: Post office schemes offer flexibility in investments. Individual can choose the amount they want to invest, the mode of investment, and the period of the investment.
Importance of post office scheme
Post office schemes play an important role in the Indian financial system. It offers a secure and reliable investment choice for millions of people nationwide looking to invest their hard-earned money.
Below are some of the reasons why post office schemes are important:
- Financial Inclusion
- Safe and Guaranteed return
- Special Schemes for Senior Citizens
- Promotes Saving Habit
Comparison of the various post office saving scheme available:-
This table show the comparison among various schemes such as post office mis scheme, post office savings scheme etc.
| S. N. | Scheme | Interest Rate (per annum) | Tenure | Minimum Investment | Maximum Investment | Eligibility | Tax deduction on investment | Interest Taxable |
|---|---|---|---|---|---|---|---|---|
| 1 | Post office saving account | 4 | NA | Rs 500 | No limit | Minor, Major | No | Yes |
| 2 | Post office monthly scheme account (MIS) | 7.1 | 5 Years | Rs 1000 | For Single A/c – Rs 4.5 Lakh & Joint A/c – Rs 9 Lakh | Individual | No | Yes |
| 3 | Post office recurring deposit account (RD) | 5.8 | 5 Years | Rs 100/ month | No limit | Individual (Adult) | No | Yes |
| 4 | Post office time deposit account (TD) (1 Year) | 6.6 | 1 Year | Rs 1000 | No limit | Individual (Adult) | No | Yes |
| 5 | Post office time deposit account (TD) (2 Year) | 6.8 | 2 Years | Rs 1000 | No limit | Individual (Adult) | Yes | Yes |
| 6 | Post office time deposit account (TD) (3 Year) | 6.9 | 3 Years | Rs 1000 | No limit | Individual (Adult) | No | Yes |
| 7 | Post office time deposit account (TD) (5 Year) | 7 | 5 Years | Rs 1000 | No limit | Individual (Adult) | Yes | Yes |
| 8 | Seniour citizen saving scheme (SCSS) | 8 | 5 Years | Rs 1000 | Rs 15 Lakh | Individuals of age > 60 years or age between 55 and 60 for retired civilian | Yes | Yes |
| 9 | Post office public provident fund | 7.1 | 15 Years | Rs 500 | Rs 1.5 Lakh per Financial year | Individual | Yes | No |
| 10 | National savings certificate (NSC) | 7 | 5 Years | Rs 1000 | No limit | Individual | Yes | No |
| 11 | Kisan Vikas Patra (KVP) | 7.2 | 30 Month Lock – In Period | Rs 1000 | No limit | Individual (Adult | No | Yes |
| 12 | Sukanya samriddhi account (SSA) | 7.6 | 21 Years | Rs 250 per Financial year | Rs 1.5 Lakh per Financial year | Girl Child up to 10 years from birth | Yes | No |
Note:- These interest rate are subject to change, please check the official website for the most current information.
Advantages of Post office scheme
here are some of these advantages provided by post office schemes below.
- Guaranteed Returns: Post office schemes offer fixed returns on investment, which is guaranteed by the government of India. This makes them a safe and reliable investment option. This means that the investor is 100 % assured of getting a fixed return on their investment irrespective of the market condition.
- Minimum Risk: Post office schemes are low-risk investments as they are backed by the government of India, which ensures the safety of the investor’s money. This makes them an attractive and lucrative investment option for risk-averse investors.
- Tax Benefits: Post office schemes is also a valuable financial tool for reducing taxes because some of the post office schemes offer tax benefits under Section 80C of the Income Tax Act, which allows the investor to claim a deduction of up to Rs 1.5 lakhs from their taxable income. This helps in reducing the tax liability of the investor.
- Accessibility: Post office schemes are easily accessible as there are more than 1.5 lakhs post offices in India, making it easy for investors to invest in these schemes as they can be accessed in any part of the country, making it convenient for investors to invest from their own hometowns.
- Wide Range of Schemes: Post office schemes offer diverse investment choices, ranging from short to long-term, high to low risk, and tax-saving to non-tax-saving options. This enables investors to choose the scheme that best suits their investment needs.
Disadvantage of post office scheme
While Indian post office schemes offer numerous benefits to investors, there are also certain disadvantages to consider before investing. Some of the key disadvantages of post office schemes are:
- Low Returns: Post office schemes offer fixed returns on investment, which are often lower than the returns offered by other investment options such as equities, mutual funds, or real estate. This means that this is not high return investment option.
- Inflation Risk: Post office schemes may not provide sufficient protection against growing inflation, as the returns offered by these schemes some time can’t beat inflation.
- Penalty: Some post office schemes may impose a penalty on premature withdrawal of the investment, which can reduce the effective returns earned by the investor.
- Low Liquidity: Post office schemes have low liquidity, which means that the investor may not be able to withdraw their investment quickly in case of an emergency. Some schemes have high lock-in period.
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Conclusion
Post office scheme play an important role in the Indian financial system by promoting financial inclusion, providing safe, reliable and trustworthy investment tool, offering tax benefits, supporting senior citizens, promoting savings habits among Indians.
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