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Investment options in Post Office

19 Jul

Post offices are here to stay and not going away in near future. It also provides one of the safest and secure ways of investing.

The telegram may be dead and postage stamps on their way out, but the post office is not sliding into oblivion. Its small savings schemes are a favorite with investors, and if India Post bags the banking license, it could be a financial powerhouse with its 1.55 lakh branches.

Here are some of the products and services offered by the post office

SAVINGS ACCOUNT
Tenure: NA
Interest rate: 4%
it has a very low minimum balance requirement of Rs 50 without cheque facility, and Rs 500 with cheques.

RECURRING DEPOSIT
Tenure: 5 years
Interest rate: 8.3%
* Investor is given a flexible window of up to 15 days to deposit the sum.
* It is not necessary to open a savings account as well.
* The term can be extended by up to five years on maturity.

TIME DEPOSITS

Tenure: 1 – 5 years
Interest rate: 8.2 – 8.4%
the five-year deposits are eligible for tax deduction under Section 80C.
Minors above 10 years can open and operate account.
Deposits can be foreclosed after one year. The one-year deposit can be foreclosed after six months.

MONTHLY INCOME SCHEME
Tenure: 5 years
Interest rate: 8.4%
* Minimum deposit Rs 1,500 and maximum of Rs 4.5 lakh.
* Interest flows into savings account at the same post office.
* It can be foreclosed after one year with a 2% deduction.
* After three years, the deduction is 1%.

SENIOR CITIZENS’ SAVING SCHEME
Tenure: 5 years
Interest rate: 9.2%
* It is open to investors above 60 years. The retired or those who have taken VRS can join at 55.
* There is a maximum limit of Rs 15 lakh per individual.
* Investments are eligible for deduction under Section 80C.
* Can be foreclosed after one year with 1.5% deduction. After two years, the deduction is 1%.
* The interest is paid out quarterly.
* Can be extended for 3 years on maturity.

PUBLIC PROVIDENT FUND
Tenure: 15 years
Interest rate: 8.7%
* There is a minimum deposit of Rs 500 and maximum of Rs 1 lakh in a year.
* Investments are eligible for deduction under Section 80C.
* The interest earned is tax-free.
* Account can be extended by five years on maturity.
* Withdrawals allowed after sixth year.

NSCs
Tenure: 5 – 10 years
Interest rate: 8.5 – 8.8%
* There is a minimum investment of Rs 100.
* Investments are eligible for deduction under Section 80C.
* Income accrued every year is treated as reinvestment and is eligible for tax benefits under Section 80C.
* There is no TDS, but income is fully taxable.

Other financial services offered by the post office are Money transfer, National Pension Scheme ( NPS). Mutual Funds, Life Insurance.
India Post is among the 36 companies that have applied for banking licenses. The launch of commercial banking operations could pitchfork the post office to the forefront of financial services in India. Be ready to see your post offices as your bank , your insurance advisor, your mutual fund shop and many more services.

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Posted by on July 19, 2013 in Uncategorized

 

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