Best Post Office schemes with higher interest rates

Post Office schemes: Almost all of the Post Office schemes scheme more popularly known as small savings scheme, beat interest rates from bank deposits. However, there are some that are really good because of their tax benefits and also benefits under Sec80C of the Income Tax Act. Not to mention that in the present context whether you are looking at short term or long-term post office small savings schemes, they tend to beat bank interest rates by a distance.

Post Office Time Deposit

The post-office term deposit (POTD) is similar to a bank fixed deposit, where you save money for a definite time period, earning a guaranteed return through the tenure of the deposit. At the end of the deposit’s tenure, the maturity amount comprises the capital deposited and the interest it earns.

Eligibility

Any individual above the age of 10 can open a time deposit account at any post office. Further, guardians can open an account on behalf of a minor. However, the minor has to apply for ownership of the account after he or she reaches the requisite age.

Income tax benefits

Income tax benefits are available only for a 5-year post office time deposit account. Depositors will be able to claim income tax exemptions of up to Rs.1.5 lakh under Section 80C of the Income Tax Act, 1961.

4. Lucrative returns

The rates of interest applicable on a National Savings Time Deposit Account is listed below –

Tenure	Rate
1 year	5.5%
2 year	5.5%
3 year	5.5%
5 year	6.7%

National Savings Certificate

Are you investing for saving tax? Well, there are several options available under section 80c of the Income Tax Act. One such investment is the National Savings Certificate NSC scheme. An initiative by the Government of India for the resident Indians to encourage savings. Investors investing in NSC qualify for section 80c tax deduction up to Rs 1.5 lakhs. The interest earned can be calculated using the NSC interest rate calculator.

How & Where can you buy it?

Earlier, physically pre-printed NSC certificates were issued by banks or Post Offices. However, the same has been discontinued w.e.f 01-July-2016. Presently, the certificates can be,

Recorded in two modes namely e-mode (electronic mode) or in Passbook mode.
Purchased from all Public Sector Banks and top three Private Banks (ICICI, HDFC & Axis)

If you have a Savings account with Bank/Post office, you can buy NSC certificates in e-mode, provided you have access to internet banking. It can be bought by an investor for self or on behalf of minor or with another adult as a joint account.

NSC Benefits & Features

Some of the key benefits and features of the National Savings Certificate are listed as follows:

Investments made in NSC involve low risk and are highly secured, due to the fact that the government of India backs the funds.
Individuals can invest in NSC with a minimum deposit of ₹ 100 and with no restrictions on the upper limit. However, investments made in NSC must be in multiples of 100.
NSC allows the investment of funds for a tenure of 5 or 10 years.
NSC offers a high return on the invested amount, due to the NSC interest rate that currently stands at 6.8%. This interest, however, is payable to the investors at the time of maturity with the NSC maturity value.
NSC savings scheme is not only an investment but also allows individuals to take a loan against it.
NSC provides the benefit of tax exemption of up to Rs 1.5 lakhs per annum.
In case an individual dies during the NSC savings tenure, then the investment can easily be transferred to another family member or the nominee.
Though premature withdrawal from the NSC certificate is not allowed. However, under certain circumstances, one can withdraw funds partially from the NSC investment. It can be done due to the demise of the actual investor or as per the court orders.

PPF

What is a PPF account?

Public Provident Fund (PPF) scheme is a long term investment option that offers an attractive rate of interest and returns on the amount invested. The interest earned and the returns are not taxable under Income Tax. One has to open a PPF account under this scheme and the amount deposited during a year will be claimed under section 80C deductions.

How to open a PPF account

A PPF account can be opened with either a Post Office or with any nationalised bank like the State Bank of India or Punjab National Bank, etc. These days, even certain private banks like ICICI, HDFC and Axis Bank among others are authorized to provide this facility. You need to submit the duly filled application form along with the required documents i.e. the KYC documents like identity proof, address proof, and signature proof. Post submitting these documents you can deposit a prescribed amount towards the opening of the account.

PPF contribution:

The minimum annual contribution for PPF account is Rs 500 and maximum is Rs 1,50,000 per year. Subscriber should not deposit more than the maximum limit as excess amount neither earns any interest nor eligible for a rebate under the Income-tax Act.

Features

Attractive Interest Rate of 7.1 % that is fully exempt from tax under Section 80C.
Good long term investment for 15 years.
Account can be extended for a block of 5 years after maturity.
Minimum deposit amount of Rs 500/- and maximum of Rs 1,50,000/- in a Financial Year.
Maximum limit of Rs 1,50,000/- as mentioned above is combined limit for deposit made by Individual in own account and in account opened on behalf of minor
If the minimum amount of Rs 500/- is not deposited in any financial year , a penalty of Rs 50/- will be charged.
Passbook will be issued to customers
PPF can be transferred from other bank / post office to HDFC Bank
Option for loan facility and partial withdrawals:
- 50% of the balance can be withdrawn after expiry of 5 years, excluding the first financial year .
- Loan facility can be availed any time between third financial year to sixth financial year i.e. From third financial year up to end of fifth financial year