The Buyt Desk
There are a number of small saving investment scheme offered by post offices spread across our country. Since these schemes are government-backed investors find them to be a safer way of investment. In many cases, they may even offer better interest rates than the banks. Post office schemes are most suited for risk-averse investors looking for regular and fixed returns. The rate of interest for most of the schemes is fixed, which is revised every quarter. Most of the schemes enjoy tax benefit under section 80C of the IT Act.
Let us discuss the details of some of the post office small savings schemes
Kisan Vikas Patra (KVP)
Any Indian citizen can open a KVP account at a post office. However, NRIs and HUFs are not eligible to open a KVP account. In this small savings scheme, you are issued a certificate. The rate of interest for the scheme is fixed. The purpose of the scheme is to double your investment within 124 months (10 years and 4 months). It is good for investor discipline because you stay invested for a long time. On the other hand, it does not offer any tax benefit to the investor.
At present, the interest rate on KVP is 6.9%.
You can open a KVP account by submitting the application form at any post office. It can be submitted online too. The first deposit should be at least Rs.1000 then you can deposit money in multiples of Rs.100. KVP certificates are available for specific values like 1000, 5000, 10000, and 50000. You have the option to transfer your KVP certificate to a different post office and even to another individual. Also, the facility of premature withdrawal, after two and a half years, is available.
Senior Citizen Savings Scheme (SCSS)
After retirement, one of the financial goals is to receive a fixed amount at regular intervals as a substitute for your income. SCSS is a good option to fulfil this goal for retired individuals above the age of 60 years. The age limit for an armed forces retiree is 50 years. The annual rate of interest is fixed. Having an SCSS account is the same as having a saving account in the bank, but SCSS offers a higher rate of interest. On the other hand, the interest is not compounded in SCSS. It does offer a tax benefit under section 80C of the IT Act.
At the moment, the interest in SCSS is 7.4%.
You can open an SCSS account with a minimum of Rs.1000 and a maximum of Rs.1 lakh. Deposits to the SCSS account can be made in multiples of 1000. The facilities of premature closure and extension after maturity (5 years) are available.
National Savings Certificate (NSC)
Like a KVP certificate, any Indian can purchase an NSC but NRIs and HUFs are not eligible for the same. NSC has a fixed rate of interest that is compounded yearly. The maturity of the scheme is 5 years. You can even take a loan against the certificate, up to 85% of the certificate’s amount, in case a need arises. NSC enjoys a tax benefit under section 80C of the IT Act. There is no limit on the maximum deposit amount in an NSC; however, the minimum deposit amount is Rs.100.
As decided on 1st April 2021, the present interest in NSC is 6.8%.
Do remember to use the post office as a safe haven for your hard-earned money. Choose the small savings scheme suitable for you. For any doubts, do not forget to consult a certified financial adv
