Post office savings schemes of 2023 that offer higher interest rates.

Savings and investment are the keys to strong financial management. Whether you have huge savings for investment or a small amount, there are various options you can look forward to. The government of India offers several post office savings schemes where one can invest in small and large amounts and seek returns with at least no risk involved. In the financial year 2023, investors can enjoy a better rate of interest as the government revised interest rates on several small savings schemes in September 2022.

The interest rates on post office small savings schemes are revised and reviewed every 3 months. In recent changes made in September 2022, the rates for 5 popular savings schemes have been hiked. These are also plans that do not enjoy tax benefits*. If you have your future financial goals are sorted, you can begin by investing in postal schemes and enjoy a substantial hike in returns.

Popular savings schemes with high interest rates:

Time deposits, senior citizen savings schemes, Kisan Vikas Patra, and monthly income account schemes are the post office savings schemes that are going to witness a high return rate in 2023. The table below gives you a quick detail of the revised interest rates:

Post Office Savings Schemes

Let's get into the details of these plans:

A. Post Office Time Deposit Schemes:

Time Deposit refers to the post office savings scheme which is fixed for 1 year, 2 years, 3 years, or 5 years (as mentioned in the table above). The Government of India has revised the interest rates for 2-year and 3-year time deposit schemes.

1. The interest rate for the 2-year and 3-year time deposit plans has been raised to 7%. Below are some of the features of time deposits:
2. Individuals can only begin investing with only INR 1000, which can be increased by a multiple of INR 100.
3. There is no cap on the maximum deposit limit.
4. The account can be opened by an individual, a guardian on behalf of their minor/unsound mind, a minor above 10 years of age, or jointly with a partner.
5. The interest is calculated quarterly and paid annually.
6. Time deposits that have a maturity period of fewer than 5 years are eligible for tax benefits* under Section 80C of the Income Tax Act, of 1961.
7. One can extend the tenure of the time deposit after the maturity of the tenure. However, every time deposit has a time limit under which you can extend the maturity, like 6 months for a 1-year time deposit, 12 months for 2 2-year time deposit and 18 months for a 3- and 5-year time deposit.
8. 6 months from the account opening date, premature withdrawal is not allowed.

B. Senior Citizen Savings Scheme

To ensure a reliable source of income post-retirement, the post office department has a senior citizen savings scheme. The current interest rate offered on SCSS is 7.6%, which is one of the highest interest-earning schemes at post offices. Here are the striking features of the savings plan:

1. Any individual above 60 years of age can open a SCSS account.
2. The account can also be opened jointly with the spouse.
3. Civilian employees between 55-60 years of age and defence employees between 50-60 years of age can also open an account.
4. With a minimum deposit of INR 1000, an account can be opened. Further deposit in the multiple of 1000 can be made.
5. A maximum of INR 30 lakhs can be deposited into all SCSS accounts of an individual. There has been an increase from 1-Apr-2023 from the erstwhile limit of Rs 15 lakhs.
6. SCSS is eligible for tax benefits* under Section 80C of the Income Tax Act, 1961.
7. Premature closure of the account is allowed. However, after 1 year, there shall be a penalty imposed.
8. Also, if you close the account for 1 year of account opening, no interest will be paid on the principal amount.
9. The SCSS account can be extended for 3 more years after maturity.

C. Monthly Income Account Scheme

As of the current rate, the National Savings Monthly Income Account Scheme offers a 7.4% interest rate which was earlier set at 6.7%. Anyone who wants to save from their monthly income can open this account. The features of a monthly income account are:

1. An individual, single or joint individual (up to 3 people) can open a monthly income account.
2. Guardians on behalf of minors or minors above the age of 10 years can open an account.
3. A monthly income account can be opened with a minimum deposit of INR 1000 and further deposited in the multiple of 1000.
4. The maximum deposit limit for an individual account is INR 9 lakhs from the earlier limit of Rs 4.5 lakhs and for a joint account, the limit is INR 15 lakhs from the earlier limit of INR 9 lakhs.
5. The interest accrued is paid on a monthly basis.
6. Prior to completing 1 year of account opening, no premature withdrawal is allowed. After 1 year, premature withdrawal at interest deductions is possible.

D. Kisan Vikas Patra

In order to encourage small savings, the government of India announced Kisan Vikas Patra in 1988. Over time, the scheme has witnessed many changes, and recently, the interest rate, along with the maturity tenure of the account, has been revised by the government. The maturity period was brought to 123 months which was 124 months earlier. The current interest rate is 7.5% which was earlier 7%. The features of the plan are as follows:

1. The amount that you invest would be doubled in 123 months, which is 10 years and 3 months.
2. With a minimum investment of INR 1000, a Kisan Vikas Patra account can be opened and the deposit can be extended to multiples of INR 100.
3. There is no maximum deposit limit on the account.
4. For an investment above INR 50,000, the investor has to provide a PAN card and source of income for investments above INR 10 lakhs.
5. Single or joint accounts (up to 3 people) can be opened.
6. Minors above 10 years of age or guardians on behalf of minors can also open an account.
7. There is no limit on the number of Kisan Vikas Patra accounts that one can open.
8. One can prematurely close the account anytime they want.
9. Transfer of Kisan Vikas Patra account is possible if the account holder dies or the court orders so.

Other accounts provided by the post office:

Apart from the aforementioned savings account of the post office, there are several other accounts offered by the post office. One can easily open their preferred account and start saving. They are:

Post Office Recurring Deposit

At an interest rate of 6.5%, an individual can open a National Savings Recurring deposit account with a minimum investment of INR 100/month. As the name suggests, a recurring account needs a specific investment every month. Single individuals, jointly (up to 3 people), minors above 10 years of age, or guardians on behalf of the minors can open a recurring deposit account. There is no cap on the maximum deposit limit. The account has a lock-in period of 3 years, after which one can close the account.

Post Office Public Provident Fund

The PPF account offers an interest rate of 7.1% which is compounded yearly. Start investing with INR 500 with a maximum investment of INR 1.5 lakhs in a year. The account cannot be opened jointly but only by an individual or guardian on behalf of their minor or unsound child. The maturity period of the PPF account is 15 years. However, after 5 years, the account can be prematurely closed at some penalty.

Sukanya Samriddhi Account

To promote and encourage savings for a girl child, the government of India introduced the Sukanya Samriddhi Account. It offers an interest rate as high as 8%, which is compounded on a yearly basis. One can open this account with a minimum investment of INR 250 and invest a maximum of INR 1.5 lakhs per year. Guardians can open Sukanya Samriddhi accounts for their female child below 10 years of age. Only one account per girl can be opened, and a family can open a maximum of 2 accounts for girls (except in the case of twins or triplets). The maturity period of the account is 21 years. However, once the girl has taught for 18 years, the account can be closed.

National Savings Certificate

With a minimum deposit of INR 1000, a National Savings Certificate account can be opened. The account has a maturity period of 5 years and earns an interest rate of 7.7%. Individuals, jointly (up to 3 people), minors above 10 years of age, or guardians on behalf of their minors can open an account. There is no maximum deposit limit or number of accounts that one can open. So, start saving today.

Benefits of investing within post office savings schemes:        

The first thing that comes to mind when thinking of investing in a post office savings scheme is security. This sense of security comes with the fact that the schemes are backed by the government of India. Here are some of the exciting benefits that post-office savings schemes offer you:

1. Security for finances:Government-backed plans and schemes are way safer and more secure than any other investment. Since post offices offer small and large investment plans, people from all walks of life look forward to these investments. Hence, schemes are made more secure in terms of returns.
2. Well within your reach:Post offices (India Post) are located in a number of locations, including rural areas of the country. So, it is not a difficult task for one to reach the branch for an account opening or any query.
3. Low deposit amount:Unlike high investment models, post offices offer schemes that can start with as low as INR 50 and INR 100 deposits. So, one can easily open an account without having to spend years accumulating funds.
4. Plethora of options:Investors need not limit their preferences since India Post has a variety of investment schemes to offer. Girl child savings plans, retirement plans, Recurring deposits, PPF, etc., are all available in one spot.
5. Minors have a place as well:The investment schemes of post offices are not limited to only adults. Even minors above the age of 10 years can open a number of savings accounts at India Post. Guardians can also open accounts on behalf of their minor child.

Conclusion:

The Post Office of India offers an easy way of creating a corpus for your financial requirements. Be it saving for your child's education/marriage, your retirement income, saving for your girl child, creating a savings account, etc. You get all these options at a post office savings scheme. Analyse your financial goals, and by considering your current monetary commitments, you can frame out a feasible plan and start investing accordingly. The government of India keeps revising the interest rates and features of the plan so that the investors can make maximum benefits. So if you haven't yet planned for a post office savings scheme, now may be the right time to begin with one.

Disclaimer:

* Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details.