When it comes to safety and reliable investment options in India, millions of people consider Post Office Savings Schemes as their top choice. Governed by the Government of India, these schemes are designed to provide savings and guaranteed returns, making them an ideal instrument for individuals looking for a low-risk appetite. In this guide, we will discuss in detail the different types of Post Office Savings Schemes and investment ideas.
Table of Contents
What Are Post Office Saving Schemes?
Post Office Saving Schemes are financial products offered by the Department of Posts under the Ministry of Communications. These schemes are aimed at promoting savings among Indian citizens, particularly those in rural areas, by providing easy access and assured returns.
Types of Post Office Saving Schemes

- Post Office Savings Account (POSA)
- Features:
- Minimum deposit: ₹500
- Interest rate: Typically around 4% per annum (taxable).
- Withdrawals are allowed via ATM or cheque.
- Who Should Opt For It?
- Ideal for individuals seeking a secure and accessible savings option.
- Features:
- Recurring Deposit (RD)
- Features:
- Tenure: 5 years.
- Monthly deposits: Minimum ₹10.
- Interest: Compounded quarterly, offering attractive returns.
- Who Should Opt For It?
- Perfect for individuals with a disciplined savings approach.
- Features:
- Time Deposit (TD)
- Features:
- Tenure: 1, 2, 3, or 5 years.
- Minimum deposit: ₹1,000 (no maximum limit).
- Interest rate: Higher for longer tenures (up to 7.5% for 5 years).
- Tax Benefit: Deposits with a 5-year tenure qualify for tax deductions under Section 80C of the Income Tax Act.
- Features:
- Senior Citizens Savings Scheme (SCSS)
- Features:
- Eligibility: Individuals aged 60 years and above.
- Deposit limit: Up to ₹15 lakh.
- Interest rate: Approximately 8.2% per annum.
- Tax Benefit: Interest is taxable, but the principal amount qualifies for deductions under Section 80C.
- Features:
- National Savings Certificate (NSC)
- Features:
- Tenure: 5 years.
- Minimum investment: ₹1,000.
- Interest rate: Around 7.7% (compounded annually but payable at maturity).
- Tax Benefit: Investments qualify for deductions under Section 80C.
- Features:
- Kisan Vikas Patra (KVP)
- Features:
- Tenure: Around 120 months (subject to interest rate revisions).
- Minimum deposit: ₹1,000.
- Interest: Ensures the amount doubles at maturity.
- Who Should Opt For It?
- Ideal for long-term investors seeking assured returns.
- Features:
- Public Provident Fund (PPF)
- Features:
- Tenure: 15 years (extendable in 5-year blocks).
- Interest rate: Approximately 7.9% (tax-free).
- Annual deposit: Minimum ₹500; maximum ₹1.5 lakh.
- Tax Benefit: The entire maturity amount (principal + interest) is tax-exempt.
- Features:
- Sukanya Samriddhi Yojana (SSY)
- Features:
- Eligibility: Parents/guardians of a girl child aged below 10 years.
- Deposit limit: ₹1,000 to ₹1.5 lakh annually.
- Interest rate: Around 8.2% (compounded annually).
- Features:
Tax Benefit: The entire maturity amount is tax-free under Section 80C.
Benefits of Post Office Saving Schemes

- Guaranteed Returns: As these schemes are backed by the Government of India, the returns are assured, ensuring financial security.
- Tax Benefits: Many schemes provide tax exemptions or deductions under the Income Tax Act.
- Accessibility: With over 1.5 lakh post offices across India, these schemes are easily accessible, even in rural areas.
- Variety: Post Office Saving Schemes cater to different financial goals, including short-term, long-term, and retirement planning.
- Safety: Investments are risk-free, as they are sovereign-backed.
- Ease of Operation: Most schemes allow for online management and provide passbooks for easy tracking.
How to Open a Post Office Saving Scheme Account
- Visit the Nearest Post Office: Carry the required documents such as ID proof, address proof, and passport-sized photographs.
- Fill Out the Application Form: Specify the scheme you want to invest in and provide accurate details.
- Submit Required Documents: Ensure all documents are attested and up to date.
- Deposit the Amount: Pay the initial deposit amount via cash, cheque, or online transfer.
- Collect Your Passbook or Certificate: This serves as proof of investment and can be used for withdrawals or closures.
Documents Required
- Aadhaar card
- PAN card
- Passport-size photographs
- Address proof (e.g., utility bills, voter ID)
Tax Implications of Post Office Saving Schemes
- Exemptions Under Section 80C:
- PPF, NSC, and 5-year TD qualify for deductions.
- Tax-Free Interest:
- PPF and SSY interest are completely tax-free.
- Taxable Interest:
- Interest earned from POSA, SCSS, and RD is taxable as per your income slab.
Factors to Consider Before Investing
- Objective: Define your financial goals—be it retirement, a child’s education, or wealth creation.
- Liquidity Needs: Some schemes, like PPF and KVP, have long lock-in periods.
- Tax Liability: Choose schemes that align with your tax-saving requirements.
- Returns: Compare interest rates across schemes to maximize benefits.
Frequently Asked Questions (FAQs)
Q1: Are post office saving schemes better than bank fixed deposits? A: Yes, in terms of guaranteed returns and tax benefits, POSS often outperforms bank FDs.
Q2: Can NRIs invest in these schemes? A: No, NRIs are not eligible to invest in post office saving schemes.
Q3: Are there penalties for premature withdrawals? A: Yes, most schemes impose penalties or provide lower interest rates for early withdrawals.
Q4: How often do interest rates change? A: Interest rates are revised quarterly by the Government of India.
Conclusion
Post Office Saving Schemes are a trusted and effective way to build a secure financial future. Whether you are saving for a short-term goal or planning for long-term stability, there is a scheme tailored to your needs. With their low risk, tax benefits, and guaranteed returns, they remain an unparalleled choice for conservative investors. Start your investment journey with POSS today and reap the benefits of financial security and peace of mind.