Post Office 7 Best Schemes: Whether you work a job or run a business, you should save a part of your income and invest it in the right place. Even small savings can grow into a big amount in the future and help you when you need money. Many people still prefer fixed deposits (FDs). But recently, as banks reduced FD interest rates, more people started choosing post office small savings schemes. While most bank FDs offer 6–7% interest, many post office schemes offer more than 7%.
Regularly, savings schemes such as the National Saving Certificate (NSC), the Sukanya Samriddhi Yojana, Kisan Vikas Patra (KVP), the Senior Citizen Savings Scheme (SCSS), and the Monthly Income Account (MIS) generally tend to provide investors with superior rates of Interest as well as Tax exemption benefits. When you invest in these schemes, you are entitled to claim Tax Exemptions on your Investment amounts under the old tax model. Below is a brief overview of the above-mentioned savings schemes.
National Saving Certificate (NSC)
The National Savings Certificate is a government-supported Savings Scheme that offers Interest at the rate of 7.7% p.a., calculated monthly. When you invest ₹10,000 this will result in approximately ₹14,490 after 5 years. An individual is permitted to deduct from their taxable Income, any Amounts up to ₹1,50,000 from the NSC under Section 80C of the Income Tax Act. The Interest earned from the NSC is taxed based on your current tax bracket; and your investment funds in the NSC are not available to you until you have reached the maturity date of your investment. The NSC is a Safe Investment provided by the Central Government of India for Individuals who are seeking to invest in a Safe, Medium to long-term, Guaranteed return.
Sukanya Samriddhi Yojana (SSY)
Sukanya Samriddhi Yojana (SSY) is a long-term savings account that can be opened only in the name of a girl child. It currently offers an attractive interest rate of 8.2% per annum. Parents can open an account in the name of their daughter and invest for 15 years. This account remains active till the age of 21 or till the daughter gets married. The most important feature of this scheme is that the amount deposited, interest earned and maturity amount are completely tax-free. It is completely free from market risk, which makes it the best government scheme for long-term planning for major expenses like higher education and marriage of a daughter. Money can be deposited in small installments, which makes investment easy for even the average middle-class family.
Kisan Vikas Patra (KVP)
Kisan Vikas Patra is a guaranteed return scheme offered by the Post Office. It currently offers an interest rate of 7.5% per annum, compounded annually. Its feature is that your investment automatically doubles in about 115 months or about 9 years and 7 months. An initial amount of Rs 10,000 becomes about Rs 20,000 at the end of the term. The scheme is fully guaranteed by the government, so there is no risk of market fluctuations or losses. Generally, as per the post office rules, money should not be withdrawn before maturity, but in some cases, partial withdrawal is allowed in certain circumstances. Kisan Vikas Patra has emerged as a reliable option for investors looking for safe, focused income and stress-free long-term savings.
Mahila Samman Savings Certificate
Mahila Samman Savings Certificate is a special small savings scheme that can be opened only in the name of women and girls, where the investment tenure is 2 years. It offers an attractive interest rate of 7.5% per annum, which increases quarterly at a compound rate, resulting in slightly higher returns than simple interest. For example, a deposit of Rs 10,000 will yield around Rs 11,602 after 2 years. This scheme has a fixed maximum investment limit, which allows women with medium and small savings to invest systematically. Women who want to invest in their name can try this special scheme as a short-term, safe and high interest scheme.
Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme is a government scheme specially designed for retired individuals and senior citizens. It currently offers an annual interest rate of about 8.2%. Interest on the deposit is credited directly to the savings account every quarter, for example, for Rs 10,000, about Rs 205 is earned quarterly, which serves as a good source of regular income after retirement. Investment under this scheme is limited to a fixed maximum limit, but couples can increase this limit by opening a joint account. This scheme is completely safe and is available at both banks and post offices, making it a reliable option for senior citizens to get a risk-free, assured and stable income. This scheme is quite popular for meeting the needs of regular cash flow like pension after retirement.
Two-Year Time Deposit Scheme
The Post Office’s two-year time deposit scheme works like a fixed deposit, which keeps money deposited for a fixed period of two years. It currently offers an interest rate of around 7% per annum and this interest is compounded every three months, resulting in a slightly higher total return. Depositing Rs 100,000 for two years can earn an interest of around Rs 7,190, which is a good return for a secure fixed income. Although withdrawals are possible midway, the interest rate may be reduced or different rules may apply. Post Office Time Deposit is considered a good option for those looking for a risk-free, fixed-interest scheme for a short period of two years.
Monthly Income Scheme (MIS)
Post Office Monthly Income Account is for investors who want to invest their money in a safe place and earn a fixed monthly income. This scheme offers an interest rate of around 7.4% per annum and this interest is directly credited to your savings account every month. An investment of Rs. 1,00,000 yields an income of around Rs. 620 per month. There are fixed minimum and maximum deposit limits and the account can be opened in a single or joint name, providing a stable cash flow to meet the regular needs of the family. This scheme is government-guaranteed, ensuring safety and returns. For retirees, housewives, or investors who need a reliable income to meet their monthly expenses, Post Office MIS is a viable option.