Post office schemes are popular among individuals who are more inclined towards risk-free investment. The reason behind this popularity is that though these can be started with a minimum amount, the interest rate offered to the customers is higher. India Post offers 9 small savings schemes having varied features and benefits. Hence, it is important for you to choose a scheme catering to your individual needs and requirements. However, with so many options it often becomes difficult for customers to decide which one to go for. To ease out the process here are 5 profitable post office savings schemes that you can vouch for to get higher returns:
5 profitable post office schemes to invest in
1. Post Office Monthly Income Scheme Account (MIS)
The maximum investment limit of the Post Office Monthly Income Scheme, commonly known as MIS, in a single account, is Rs.4.5 lakh. A customer investing in this scheme is required to invest in multiples of Rs.1,500. When you invest in this scheme you can either contribute individually or can open a joint account with your spouse or any other friend or family member. Even if you invest with other individuals, you will have equal ownership of the account like the other account holders. The benefit of opening a joint account is that it will increase the maximum investment limit to Rs.9 lakh. While this scheme allows you to open an account in the name of a minor, it also permits a 10 -year old minor to operate the account. The account holder is offered an interest rate of 7.7% p.a. for the quarter ending 31 March 2019 and the amount is paid on a monthly basis.
In case of urgency and due to any other reason, the deposited amount can be withdrawn by the account holder before its maturity after the completion of 1 year from the date when the account was opened. In case the amount is withdrawn by you before 3 years the account holder will be charged a 2% deduction from the deposit and after the completion of 3 years, the deduction/penalty will be 1% of the deposit. After the maturity of the scheme, a bonus of 5% on the principal amount will be offered for accounts that was opened on or after 1.12.07 till 30.11.2011. However, there are no bonus on the deposits made on or after 1 December 2011.
2. 15-Year Public Provident Fund Account (PPF)
Public Provident Fund Account, also known as PPF, is another profitable post office scheme sponsored by the Government of India. The government pays regular interest on the account and the rate is fixed on a quarterly basis. A PPF account can be opened with a minimum subscription of Rs.100. You can deposit any amount between Rs.500 and Rs.1 lakh in the account in a particular year. The account holder is required to deposit minimum Rs.500 and maximum Rs.1.5 lakh in a financial year (FY) to keep the account in an operational state. However, you needn’t deposit the entire amount in the scheme in one go. It can be either deposited in 12 installments spread throughout the year or in lump-sum, whichever you feel is convenient. This scheme features a maturity period of 15 years and you can withdraw the complete deposited funds upon maturity. However, partial withdrawals can be made from the account after the completion of 5 years.
After 5 years you can withdraw up to 50% of the amount that was in the account at the end of the 6th year. The period can be extended further for up to 5 years within 1 year of maturity. The investors will also have the flexibility to continue to invest or stop investing in the account completely. It doesn’t allow the account holders to make premature closure of the account before 15 years. One of the extremely important benefits of this scheme is that people who have invested in it can claim tax exemption benefits under Section 80C of the Income Tax Act, 1961 on the deposits at the time of deposit, accrual of interest, and withdrawal – EEE. Contributions made towards this scheme of up to Rs.1.5 lakh each year is free from tax. The PPF scheme offers 8% p.a. interest and you will not be taxed for the interest income.
3. 5-Year Post Office Recurring Deposit Account (RD)
Recurring Deposit Accounts, abbreviated as RD, enables individuals to make regular payments on a monthly basis in order to save money for the future. In order to open a Recurring Deposit Account, abbreviated as RD, you have to deposit any amount in multiples of Rs.5 or minimum of Rs.10 every month. There is no maximum investment limit for this scheme. The tenure of such schemes usually ranges between 7 days and 10 years. You can select the tenure and the minimum payment that you want to make every month as per your suitability. Upon maturity, an Rs.10 account fetches around Rs.725.05 which is highly profitable. Such accounts can be continued for another 5 years on a year-to-year basis. A Recurring Deposit offers 7.3% p.a. interest to the account holder. In accounts that are opened up to 15th of a month, a subsequent deposit can be made up to the 15th day of the succeeding month.
In cases of accounts that are opened between the 16th day and last working day of a month, deposits can be made up to the last working day of the upcoming month. If the subsequent deposit is not made up to the pre-decided day, you will be charged with a default fee of Rs.0.05 for every Rs.5 for each default. In the case of 4 subsequent defaults, the account will get discontinued. However, you can revive the account within 2 months. In case you don’t revive it within this period you will not be able to make any further deposits.
So, these are the 3 most popular and best schemes offered by India Post which can fetch you higher returns in the future. Being backed by the Government of India, these schemes assure guaranteed returns. By investing in them you can save a good amount of money for securing your future. Hence, make sure to pick the most suited scheme for yourself based on your requirements and start saving.