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Post office schemes

Neeti (Student) (235 Points)

20 April 2013

is investment in schemes like post office time deposit,post office savings scheme etc beneficial? i'm presently pursuing articleship & can invest upto rs 2000 pm. what kind of return can 1 expect? kindly advise.

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Deepak Gupta (CA Student) (15922 Points)
Replied 20 April 2013

Originally posted by : Neeti
	is investment in schemes like post office time deposit,post office savings scheme etc beneficial? i'm presently pursuing articleship & can invest upto rs 2000 pm. what kind of return can 1 expect? kindly advise.

Salient features of Post Office Time Deposits

Item

Descripttion

Eligibility

Any individual singly or jointly with another adult.

An adult individual on behalf of a minor.

Minimum amount

Rs. 200/-

Maximum amount

In multiples of Rs. 50/-. No upper limit.

Maturity period

One year, Two years, Three years and Five years.

Nomination facility

Available

Interest Rate

Period	Interest Rate
Period	upto 30.11.2011	w.e.f. 01.12.2011	w.e.f. 01.04.2012	w.e.f. 01.04.2013
One Year	6.25%	7.70%	8.20%	8.20%
Two years	6.50%	7.80%	8.30%	8.20%
Three years	7.25%	8.00%	8.40%	8.30%
Five Years	7.50%	8.30%	8.50%	8.40%

The interest on deposits is calculated on quarterly compounding basis and is payable annually.

Premature withdrawal

Allowed after expiry of six months from the date of deposit, subject to following conditions :

For accounts opened upto 30.11.2011: No interest is paid for the deposit withdrawn prematurely after six months but before the expiry of one year.

In case of deposits for two, three or five years withdrawn prematurely after the expiry of one year from the date of deposit, interest is payable for the completed years and months at 2% lower rate than specified for the completed period. For Accounts opened on or after 1st December 2011:

Where a deposit in 1-Year, 2-Years, 3-Years or 5-Years account is withdrawn prematurely after 6 months but before expiry of one year from the date of deposit, simple interest at the rate applicable to Post Office Saving Account from time to time shall be payable.

In case of deposits for two, three or five years withdrawn prematurely after the expiry of one year from the date of deposit, interest is payable for the completed years and months at 1% lower rate than specified for the completed period.

Tax benefits

Available w.e.f. Financial Year 2007-08 i.e. Assessment Year 2008-09 for Term Deposits of 5 year.

Interest Taxability

Taxable

Other features

A deposit can be renewed with retrospective effect, subject to the following:

Period elapsed from the date of maturity	Minimum period of re-deposit
6 months or less	1 year
More than 6 months up to 12 months	2 years
More than 12 months up to 18 months	3 years
More than 18 months	5 years

Agency Commission

0.5%

Salient features of POMIS (Post Office Monthly Income Scheme)

Item	Descripttion
Eligibility	Any individual singly or jointly with other one or two adults. A guardian on behalf of minor or a person of unsound mind. A minor who has attained the age of 10 years.
Minimum amount	Rs. 1,500/-
Maximum amount	Rs. 4.5 lakhs in single account and Rs. 9 lakhs in joint account. Any number of accounts can be opened subject to the maximum prescribed limit.
Maturity period	Six years for accounts opened upto 30th November 2011. Five years for accounts opened after 1st December 2011.
Nomination facility	Available
Interest Rate	8 per cent per annum for accounts upto 30th Novemeber 2011. Additionally bonus of 5 per cent of the deposit amount on maturity after six years for accounts opened upto 30th November 2011. 8.20 % per annum on accounts opened on or after 1st December 2011. No bonus is payable for accounts opened on or after 1st December 2011. Interest rate revised to 8.50% w.e.f. 01.04.2012. Interest rate revised to 8.40% w.e.f. 01.04.2013.
Premature withdrawal	Can be prematurely encashed after one year but before 3 years at the discount of 2% of the deposit and after 3 years at the discount of 1% of the deposit. (Discount means deduction from the deposit.) No bonus is applicable to any premature closure of the Account.
Tax benefits	Not available.
Interest Taxability	Taxable.
Other features	Deposits are exempt from Wealth Tax. Non-Resident Indians and HUFs are ineligible to open the account. Facility of automatic credit of monthly interest to saving account if accounts are at the same post office. Interest not withdrawn do not earn any interest. Minors have a separate limit of investment of Rs. 3 lakhs and the same is not clubbed with the limit of guardian. No tax deduction at source. A single Monthly Income Scheme Account can be converted into joint Account and vice versa.
Agency Commission	0.5% w.e.f. 1st December 2011.

Salient features of PORD (Post Office Recurring Deposit) Scheme

Item	Descripttion
Eligibility	Any resident adult individual singly or jointly with one or two other adults. Minor's accounts can be opened through guardians. A minor, who has attained 10 years age, can also open the account.
Minimum amount	Monthly Rs. 10/-
Maximum amount	Any amount in multiples of Rs. 5/-
Maturity period	60 months
Interest Rate:	The interest paid varies as declared by the Directorate, Small Savings from time to time. The current rate of interest is 7.5% p. a.(quarterly compounded) for accounts opened upto 20.11.2011. The interest rate increased to 8.2% per annum w.e.f. 1st December 2011. Interest rate increased to 8.40% w.e.f. 01.4.2012. Interest Rate revised to Rs. 8.30% w.e.f. 01.04.2013.
Transferability	Transferable from one office to another.
Tax benefits	Not available.
Interest Taxability	Taxable
Other features	The amount of deposit made at the time of opening of the account cannot be varied. The Recurring Deposit Account matures on the date on which it is opened after the end of the term. In case the date of maturity falls on Sunday or postal holiday, the payment becomes due on the business day immediately preceding the date of maturity. Maximum defaults allowed in an account is four. After four defaults the account is treated as 'discontinued'.Discontinued account can be revived by paying defaulted deposits, within two months from the fifth default. If it is not so revived, the account cannot be continued. The holder of an account may prematurely close the account after 3 years of date of opening of the account. Interest at the rate applicable from time to time to Post Office Savings Account shall be payable on such premature closure of account. Premature closure is permitted on completion of 3 years from the date of opening. Interest is calculated as per the rules and rate applicable to individual savings account. One withdrawal (Advance against Deposit) is permitted from the account on completion of one year from the date of opening, on theconditions that: At least 12 deposits should have been made Account should not have been discontinued one. Amount not exceeding 50% of the balance. Withdrawal may be repaid in one lump or in equal monthly installments. Interest is charged at 15%. Where a Depositor in a single account or a surviving depositor in a joint account dies during the Maturity period of an account, the legal heir of such depositor is paid the amount as if the depositor had paid all the sixty monthly deposits, subject to the conditions that: The age of the depositor is not less than 18 years and not more than 53 years. The payment amount is restricted to the maturity value of an account of denomination of Rs. 50/-. The account has not become a discontinued account. The period from the date of opening of the account to the date of death of the depositor or surviving depositor, is not less than two years and the first 24 monthly deposits have been made without default. No withdrawal has been made from the Account during the first 24 months After maturity of the account, it can be continued for a further period of 5 years with or without further deposits. During this extended period, the account can be closed at any time. Post maturity interest is paid at the prescribed rate.