post office schemes

Issuer

Department of Posts

Institution

GOVT / GOVT BACKED

Min Application Amount

INR. 10/- and in multiples of INR. 5/- thereafter

Max Application Amount

No limit.

Tax Treatment of Income

Taxable returns, no tax deduction at source

Tax Benefit on Investment

Not Applicable

Withdrawal

Partial withdrawal facility available

Effective Annual Interest Rate

7.12 %

Specifications

· Any individual (a single adult or two adults jointly) can open an account.

· Advance Deposits earn rebate.

· Four defaults are allowed.

· Defaults can be paid within two months.

· Premature closure allowed after three years.

· Pay Roll Savings Scheme is also available for employees of various Establishments.

Pros

Guaranteed returns

Cons

Taxable returns

Issuer

Department of Posts

Institution

GOVT / GOVT BACKED

Min Application Amount

Rs.1500/-

Max Application Amount

Rs. 4.50 lakhs in a single account and Rs.9 lakhs in a joint account.

Tax Treatment of Income

Taxable returns, no tax deduction at source

Tax Benefit on Investment

N.A.

Withdrawal

Available with penalty

Effective Annual Interest Rate

7.55 %

Specifications

· No Bonus admissible on maturity in the accounts opened on or after 1st Dec 2011.

· The maturity Period of Monthly Income Accounts to be opened on or after 1st Dec 2011 shall be 5 years.

· Premature encashment facility after one year.

· Account can be opened by an individual, two/three adults jointly, and a minor through a guardian.

· A minor having attained 10 years of age can open an account in his/her own name directly.

· Non-Resident Indian / HUF cannot open an Account. Minors have a separate limit of investment of Rs.3 lakhs and the same is not clubbed with the limit of guardian.

· A separate account is opened for each deposit.

· Any number of accounts can be opened subject to the maximum prescribed limit.

· Facility of automatic credit of monthly interest to saving account if accounts are at the same post office.

· Facility of premature closure of account after 1 year to 3 years @ 2.00% discount.

· Facility of reinvestment on maturity of an account.

· Interest not withdrawn does not carry any interest.

· Maturity proceeds not drawn are eligible to earn savings account interest rate for a maximum period of two years.

· Account is transferable to any Post Office in India, free of cost.

· Nomination facility is available.

· Rebate under section 80 C is not admissible.

Pros

Most suitable scheme for senior citizens and for those who need regular monthly income.

Cons

Deduction of 1% if account is closed prematurely at any time after three years.

Issuer

Department of Post

Institution

GOVT / GOVT BACKED

Min Application Amount

100

Max Application Amount

No maximum limit for investment

Tax Treatment of Income

Taxable returns

Tax Benefit on Investment

Tax benefit available under section 80C of Income Tax Act

Withdrawal

Not Available

Effective Annual Interest Rate

7.74 %

Specifications

· Certificates can be kept as collateral security to get loan from banks.

· Investment up to INR 1,00,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act.

Pros

Returns are higher than prevailing bank FDs, tax benefit also available

Cons

taxable returns, lockin period

Issuer

Department of Posts

Institution

GOVT / GOVT BACKED

Min Application Amount

1,000/-

Max Application Amount

15,00,000/-

Tax Treatment of Income

Taxable returns, no tax deduction at source

Tax Benefit on Investment

Amount invested upto one lac qualifies for tax benefit under section 80C of Income Tax Act

Withdrawal

No withdrawal permitted before the expiry of a period of five years from the date of opening of the account.

Effective Annual Interest Rate

8.35 %

Specifications

· A new avenue of investment and return for Senior Citizen.

· The account may be opened by an individual, Who has attained age of 60 years or above on the date of 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 opening of the account within three months from the date of retirement.

· No age limit for the retired personnel of Defence services provided they fulfill other specified conditions.

· The account may be opened in individual capacity or jointly with spouse.

· Non-resident Indians (NRIs) and Hindu Undivided Family (HUF) are not eligible to open an account.

· The depositor may extend the account for a further period of 3 years.

Pros

Guaranteed income for senior citizens/retired people

Cons

Taxable returns, Partial withdrawal not allowed

Issuer

Department of Posts

Institution

GOVT / GOVT BACKED

Min Application Amount

INR.200/- and in multiples of INR. 200/- thereafter

Max Application Amount

No limit.

Tax Treatment of Income

Interest is taxable

Tax Benefit on Investment

Tax benefit under section 80C available for 5 year term deposit

Withdrawal

Available

Effective Annual Interest Rate

7.61 %

Specifications

· Any individual (a single adult or two adults jointly) can open an account.

· Group Accounts, Institutional Accounts and Misc. account not permissible.

· Trust, Regimental Fund or Welfare Fund not permissible to invest.

· 1 Year, 2 Year, 3 Year and 5 Year Time Deposit can be opened.

· In case of premature closure of 1 year, 2 Year, 3 Year or 5 Year account on or after 01.12.2011, if the deposit is withdrawn after 6 months but before the expiry of one year from the date of deposit, simple interest at the rate applicable to from time to time to post office savings account shall be payable.

· In case of premature closure of 2 year, 3 year or 5 year account on or after 01.12.2011, if the deposit is withdrawn after the expiry of one year from the date of deposit, interest on such deposits shall be calculated at the rate, which shall be one per cent less than the rate specified for a period of deposit of 1 year, 2 year or 3 years as mentioned in the concerned table given under Rule 7 of Post office Time Deposit Rules.

· Rate of interest – 8.20%, 8.20%, 8.30%, 8.40% compounded quarterly for 1,2,3 & 5 years TD account respectively.

· The investment in the case of 5 years TD qualify for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.

Pros

Guaranteed returns

Cons

Returns are taxable, Not suitable for investors in high tax bracket