Small Savings Schemes

Small savings schemes are designed to provide safe and attractive invest-    ment options to the public and at the same time to mobilize resources for development.
These schemes are operated through about 1.54 lakh post offices throughout the country. Public Provident Fund Scheme is also operated through about 8000 branches of public sector banks in addition to the post offices. Deposit Schemes for Retiring Employees are operated through selected branches of public sector banks only.

Post Office Monthly Income Scheme (MIS)
Salient Features:
  • Interest rate of 8.4% per annum payable monthly w.e.f. 01-04-2013
  • Maturity period is 5 years.
  • No Bonus on Maturity w.e.f. 01.12.2011.
  • No tax deduction at source (TDS).
  • No tax rebate is applicable.
  • Minimum investment amount is Rs.1500/- or in multiple thereafter.
  • Maximum amount is Rs. 4.50 lakhs in a single account and Rs.9 lakhs in a joint account.
  • Auto credit facility of monthly interest to saving account if accounts are at the same post office.
  • Account can be opened by an individual, two/three adults jointly, and a minor through a guardian.
  • 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.
  • Facility of premature closure of account after 1 year but on or before 3 years @ 2.00% discount.
  • Deduction of 1% if account is closed prematurely at any time after three years.
  • Suitable scheme for retired employees/ senior citizens and for those who need regular monthly income.

National Savings Certificate (NSC)

Salient Features:

  • NSC VIII Issue (5 years) – Interest rate of 8.5% per annum w.e.f. 01-04-2013
  • NSC IX Issue (10 years) - Interest rate of 8.8% per annum w.e.f. 01-04-2013
  • Minimum investment Rs. 100/-. No maximum limit for investment.
  • No tax deduction at source.
  • Investment up to Rs 1,00,000/- per annum qualifies for Income Tax Rebate under NSC - section 80C of IT Act.
  • Certificates can be kept as collateral security to get loan from banks.
  • Trust and HUF cannot invest.
  • A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor.
  • The interest accruing annually but deemed to be reinvested will also qualify for deduction under NSC - section 80C of IT Act.

Public Provident Fund (PPF)

Salient Features:

  • Interest rate of 8.7% per annum w.e.f. 01-04-2013.
  • Minimum deposit is 500/- per annum. Maximum deposit is Rs. 1,00,000/- per annum
  • The scheme is for 15 years.
  • Investment up to Rs 1,00,000/- per annum qualifies for Income Tax Rebate under section 80C of IT Act.
  • Interest is completely tax-free.
  • Deposits can be made in lumpsum or in 12 installments.
  • One deposit with a minimum amount of Rs 500/- is mandatory in each financial year.
  • Withdrawal is permissible from 6th financial year.
  • Loan facility available from 3rd financial year upto 5th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2011.
  • Free from court attachment.
  • Non-Resident Indians (NRIs) not eligible.
  • An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons.
  • Ideal investment option for both salaried as well as self employed classes.

Post Office Time Deposit Scheme

Salient Features:

  • 1 year, 2 year, 3 year and 5 year time deposits can be opened.
  • Interest payable annually but compounded quarterly:
  • One Year         8.2%
  • Two Years       8.3%
  • Three Years 8.4%
  • Five Years 8.5%
  • Minimum amount of deposit is Rs 200/- and in multiples of Rs 200/- thereafter. No maximum limit.
  • Investment up to Rs 1,00,000/- per annum qualifies for Income Tax Rebate under section 80C of IT Act.
  • Interest income is taxable.
  • Facility of redeposit on maturity of an account.
  • In case of premature closure of 1 year, 2 Year, 3 Year or 5 Year account on or after 01.12.2011 between 6 months to 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.
  • 2 year, 3 year or 5 year accounts on or after 01.12.2011 if closed after one year, interest on such deposits shall be calculated at a discount of 1% on the rate specified for respective period as mentioned in the concerned table given under Rule 7 of Post office Time Deposit Rules.
  • Account can be pledged as security against a loan to banks/ Government institutions.
  • 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.

Senior Citizen's Savings Scheme

Salient Features:

  • Interest @ 9.2% per annum from the date of deposit on quarterly basis w.e.f. 01-04-2013
  • Minimum deposit is Rs 1000 and multiples thereof. Maximum limit of 15 lakhs.
  • Maturity period is 5 years and can be extended for a further period of 3 years.
  • Age should be 60 years or more, and 55 years or more but less than 60 years who 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.
  • TDS is deducted at source on interest if the interest amount is more than Rs 10,000/- per annum.
  • Investment up to Rs 1,00,000/- per annum qualifies for Income Tax Rebate under section 80C of IT Act.
  • Interest can be automatically credited to savings account provided both the accounts stand in the same post office.
  • Premature closure is allowed after one year on deduction of 1.5% of the deposit and after 2 years on deduction of 1%.
  • No withdrawal permitted before the expiry of a period of 5 years from the date of opening of the account.
  • Non-resident Indians (NRIs) and Hindu Undivided Family (HUF) are not eligible to open an account.

Post Office Savings Account

Salient Features:

  • Rate of interest 4.0% per annum
  • Minimum amount Rs 50/- in case of non-cheque account, Rs.500/- in case of cheque account.
  • Maximum balance permissible is Rs 1,00,000/- in a single account and Rs 2,00,000/- in a joint account.
  • Interest Tax Free.
  • Any individual can open an account.
  • Cheque facility available.
  • Group Account, Institutional Account, other Accounts like Security Deposit account & Official Capacity account are not permissible.
Source: moneycontrol


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