Right now, let’s talk about today’s article: small savings schemes, which most of you know as post office schemes, and their latest interest rates. In today’s article, we will discuss the latest interest rates of all these schemes. Still, we will also discuss many other essential details of these schemes, such as their tax treatment, whether TDS will be deducted, the minimum and maximum amounts that can be invested, the age criteria, and many other details. We will discuss them in today’s article. In today’s article, you will get updated information on all post office schemes.
Important Tax Information
See, the first thing is that the TDS limit, if any of you do not know, is up to Rs. 50,000, so no TDS will be deducted. And if you are a senior citizen (i.e., above 60 years of age), this limit increases to Rs. 1 lakh.
So, when I say that TDS is applicable, it does not mean that your TDS will be deducted. If it is within this limit, then nothing will happen. After this, the second point is that whenever I say that interest income is taxable, it does not mean you have to pay tax on it. Suppose your total income is within Rs. If you have 12,00,000, then you do not have to pay any tax on Rs. 1,000,000. If it exceeds that, you will have to pay tax on your taxable income.
1. Post Office Time Deposit Scheme (Fixed Deposit)
The Post Office Time Deposit Scheme, also known as the Fixed Deposit Scheme, is a simple term for the four options: 1-year FD, 2-year FD, 3-year FD, and 5-year FD.
If you invest your money in this for 1 year, you will earn 6.9% interest. If you do it for 2 years, then you will get 7%. If you do it for 3 years, then you will get 7.1%. If you invest in this for 5 years, you will earn 7.5%. The interest rate you have seen at this time is the highest. At this time, in any government bank or any big private bank, you will not see such a high interest rate. The highest in the market is approximately 6.5% to 6.6%. So, compared to that, this interest rate is very high.
There is greater safety because of the sovereign guarantee. So, you will not get a better option than this for FD at this time. The interest you receive on this is paid annually. It does not mean that you have to wait till maturity. At the end of every year, you accept the interest payment, let’s say around 31st March. The compounding frequency is quarterly, which gives you a chance to earn a little more interest.
The minimum investment is Rs. 1000, and there is no limit to the maximum. You can do as much as you want. You get premature closure after 6 months. That means you can withdraw all your money from it after 6 months. But keep in mind that whenever you withdraw money from any scheme before the time, you have to pay a penalty. Whatever money you earn is taxable, and TDS applies.
Example:
If you have invested Rs. 10 lakh for 1 year, the interest you will receive at maturity will be around Rs. 70,806. If you invest Rs. 10 lakh for 2 years, your annual interest will be around Rs. 71,858. If you invest for 3 years, you will earn an interest of Rs. 72,900. If you invest this for 5 years, you will earn an interest of Rs. 77,135. If you look at the total interest, then you will earn around Rs.385,000 in 5 years.
2. Monthly Income Scheme (MIS)
This is a 5-year scheme. When you invest in this, you receive a fixed monthly income for 5 years. The interest is paid monthly. The interest rate you will receive at this time is 7.4%, which is excellent. You won’t get this much anywhere at this time.
You can start the investment of Rs. 1,000 or more. The maximum is Rs 9,00,000 for an individual account. And if it is a joint account, the limit increases to Rs. 15,00,000. Premature closure will be allowed only after a year. So, you cannot withdraw your money from this for a year. Every dollar you earn is taxable. And TDS is also applicable here.
Example:
If you have invested Rs.5,00,000 in this scheme, you will receive a monthly interest of Rs.3,000 at an interest rate of 7.4% for 5 years. If you look at the total interest over these 5 years, it is around Rs. 1,85,000.
3. Recurring Deposit Account (RD)
The RD account scheme is a 5-year scheme. You have to invest regularly. You have to invest at least Rs.100 every month. And there is no maximum limit. So, you can invest as much as you want each month.
The interest rate you will get at this time is 6.7%, which is very good. If you compare it with other post office schemes, you will find it lower. But if you look at it from different market segments, it is perfect.
Interest will be paid at maturity. At the same time, you will get all the money after 5 years. The compounding frequency is quarterly. Because of this, you get a little extra benefit here. You get premature closure after 3 years. That is, you cannot withdraw your money from it for 3 years. Whenever you invest in it, keep in mind that you cannot withdraw the money for 3 years.
Whatever you earn in it is taxable. And TDS is also applicable here.
Example:
If you invest Rs. 5000 in this RD account every month for 5 years at an interest rate of 6.7%, you will receive Rs. 3,56,000 on maturity. In which Rs.3,00,000 will be yours. The remaining amount of Rs.56,000 will be your interest income.
4. Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme is only for senior citizens. The interest you will get in it is 8.2%, which is much better. For senior citizens, there can be no better scheme than this at this time. You will not get so much interest anywhere.
The interest payment you receive in this is paid quarterly. It means you will receive interest payments every 3 months. This scheme is for 5 years. So, for 5 years, you will receive interest every 3 months.
The minimum investment is Rs.1,000. The maximum investment limit is Rs. 3,00,000. Premature closure is allowed. Whatever money you earn is taxable. And TDS is also applicable.
Example:
If you invest Rs. 10,00,000 in this, you will receive approximately Rs. 20,500 every 3 months for the next 5 years, at an interest rate of 8.2%.
5. Public Provident Fund (PPF)
The Public Provident Fund Scheme is a 15-year scheme. But if you want, you can extend it by another 5 years.
The interest you are getting in this is 7.1%. The interest rate here keeps changing. After 3 months, if the government increases interest rates, you would have a chance to earn more interest. If it decreases, then you will get a little less interest.
The good thing is that its tax treatment is fantastic. You do not have to pay a single rupee tax. So whatever money you receive on maturity will all go into your hands. There is no tax problem here. The interest rate is also 7.1%. In the market, you get 6.5% or 6.6% in FD. And in that, too, you will have to pay tax if you exceed the exemption limit of that tax bracket. But there is no such problem in it.
You would have to invest a minimum of Rs. 500 every year. And you can invest up to Rs. 1.5 lakh every year.
You also get the facility of premature closure. But you get it after 5 years. So here, the liquidity is a little tight. When you invest in it, do so with the understanding that you cannot withdraw your money for 5 years. And even after 5 years, specific terms and conditions apply. You also have the option of a partial withdrawal. If you feel there is no need to close it, you can withdraw some money. The interest compounding frequency is annual here.
Example:
If you invest Rs. 5000 in this PPF scheme for the next 15 years continuously, at the 7.1% interest rate, you will receive a tax-free amount of Rs. 15,77,000 at maturity. You have deposited Rs. 9 lakh. And the interest amount in this is Rs. 6,77,000.
6. National Saving Certificate (NSC)
NSC is a 5-year scheme. The interest you are currently receiving is 7.7%, which is a lot. You won’t get this much interest in any scheme of the Post Office. And if you compare it with the FD of Banks, the interest rate is significantly higher.
The interest payment is made at maturity. The minimum limit is Rs. 1000, and there is no maximum limit. So, you can invest as much as you want.
TDS is not applicable. But whatever interest you earn, it is taxable here. Premature closure is not allowed here. So, this is the biggest demerit of this scheme: you don’t get to see the facility before it’s prematurely closed. So, when you invest in this, keep in mind that you won’t get your money for 5 years.
Example:
If you have invested Rs. 5 lakhs in this scheme, after 5 years, at an interest rate of 7.7%, the amount you will receive on maturity will be around Rs. 7,24,000. In which Rs. 5 lakhs are yours, and the remaining amount of Rs. 2,24,000 is your interest here.
7. Kisan Vikas Patra (KVP)
In Kisan Vikas Patra, the interest you are currently receiving is 7.5%, which is very good. The specialty of this scheme is that it doubles your money. The more money you invest in this, the more you will get.
All interest payments here are made at maturity, and the money that will mature in this will be due after 9 years and 7 months. That is, if you look at it in months, then it is around 115 months. So, within 10 years, your money will double here.
After 2.5 years (2 years and 6 months), you can withdraw all your money from this. Whatever money you earn from this will be taxable. But the good thing is that TDS does not apply here.
Example:
If you have invested approximately Rs. 10 lakhs in this scheme, after 9 years and 7 months, that is, in 10 years, you will get double the amount you invested. That is, you will get Rs. 20 lakhs.
8. Sukanya Samriddhi Account
The Sukanya Samriddhi Scheme is made for girls only. You can invest in this in your daughter’s name. The interest rate that you get at this time is 8.2%, which is very good.
The tax treatment is also perfect. You don’t have to pay any tax on this. So whatever money you receive at maturity, you can take it all home. If you have a small daughter in your house, you can invest your money in her name. You can invest a minimum of Rs. 250 in a financial year. And the maximum investment is up to Rs. 1.5 lakh in a financial year.
After 5 years, you get to see the facility of premature closure. So, after that, you can withdraw all your money. But yes, again, there are specific terms and conditions. Meanwhile, you should also be aware of the SBI interest rates.
Example:
If your daughter is 5 years old and you have decided to invest Rs. 5000 every month for next 15 years, then in this case, if you invest Rs. 5000 every month for 15 years, at the time of maturity, according to the interest rate of 8.2%, you will get an approximate amount of Rs. 27,73,000. And this amount will be completely tax-free. So, you don’t need to pay any tax. In this amount of Rs. 27,73,000, Rs. 9,00,000 is yours. The remaining interest is approximately Rs. 18,73,000.
Conclusion
I hope you have understood all the updated information about the Post Office’s schemes. We haven’t discussed it in much detail. We have only told you the main things. You may have some doubts. So, you can ask those questions in the comments. I will try my best to clear all your doubts in the comment section. So that’s all for this article. Thank you for reading it.