Post Office Savings Account
Post Office Savings Account is one of the very popular, simple to open and easily accessible savings accounts in India. It requires a minimal initial deposit from individuals from all walks of life. It offers a simple and secure platform for individuals to inculcate the habit of saving.
Post Office Savings Account is offered with its following objectives,
- For encouraging the habit of saving
- Offered as a highly secure instrument to deposit your funds
- To cater to the diverse needs of the public
- Providing attractive returns on your saving with safety feature
How to Open Post Office Savings Account?
Opening a Post Office Savings Account is a hassle-free procedure which can be done by following just few steps. Interested eligible persons can visit their nearest post office, procure the account opening form, fill out the form and submit it along with the necessary documents along with Rs. 500 at a Post Office. On completion of form submission process, the savings account will be opened in 2 business days.
After opening of your account, you will get following benefits,
- Cheque book
- Debit card/ATM card
- Nebanking
- Mobile banking
- Aadhaar seeding
Post Office Savings Account can either be opened singly or jointly. Remember that a single account cannot be converted into a joint account and vice versa. Further, a person can only hold one single and one joint account at a particular post office.
Post Office Savings Account Eligibility
Eligibility criteria for a Post Office Savings Account are minimal and as detailed below.
- Any individual, whether residing in urban or rural areas, can open an account.
- Minors with a minimum age of 10 years can open the account themselves.
- Minors below 10 years of age can also avail themselves of the benefits as a parent/guardian can open such account on behalf of the minor.
- Parent/guardian can open an account on behalf of a person of unsound mind.
When the minor account holder turns major i.e. when he attains the age of 18 years, he has to get the account transferred to his name
Post Office Savings Account Documents Required
To open an account, individuals need to submit,
- A filled up application form
- KYC documents
- Identity proof
- Address proof
- Recent passport size photographs
Investment Amount
| Details | Amount |
|---|---|
| Minimum deposit amount | Rs.500 |
| Minimum subsequent deposit | Rs.10 |
| Maximum deposit | No limit |
| Minimum withdrawal | Rs.50 |
- Post Office Savings Account requires a minimum balance of Rs.500 to be maintained by the account holder. No withdrawal will be permitted which effects reducing of minimum balance Rs.500
- In case account balance not raised to Rs. 500 at the end of financial year Rs. 50 will be deducted as Account Maintenance Fee
- If account balance became Nil the account shall stands automatically closed
- Any deposits/withdrawals have to be made in whole rupees only
- If no deposit in or withdrawal from a post office savings account takes place in an account during continuous 3 financial years, the account becomes silent/dormant. To revive a silent/dormant account, a fresh request letter for revival along with KYC documents is required to be submitted to the concerned post office
Post Office Savings Account Features
- Available in urban as well as rural areas
- Can be helf singly or jointly
- Facility to transfer of account from one post office to another with ease
- Nomination is mandatory
- The account is available in both single and joint holdership which gives you flexibility to open the account as per your preferences
Post Office Savings Account Benefits
One of the primary benefits is the security provided by the government. Secondly, it offers a bit more returns than savings account interest rates offered by majority of banks. Further, the account facilitates easy access to banking services through a vast network of post offices across India. It provides immense liquidity.
Interest Rate of Post Office Savings Account
The interest rates for Post Office Savings Accounts are set by Ministry of Finance. Interest is calculated on a quarterly basis and credited annually.
Currently, the interest rate is as given below (effective from 01.01.2024),
| Details | Interest Rate |
|---|---|
| Rate of Interest | 4.0% per annum on individual/joint accounts |
Though the interest rate is conservative compared to other investment avenues, they provide a secure way for the growth of savings.
How is Interest on Post Office Savings Account Calculated?
Interest will be computed on the basis of minimum balance between 10th of the month and last day of the month (allowed in whole rupees only)
Interest is credited in account at the end of each financial year at the interest rate prescribed by Ministry of Finance
- If balance between 10th of the month and last day of the month falls below Rs.500: Interest will not be paid in that month
- At the time of closure of account: Interest will be paid up to the preceding month in which account is closed
Tenure of Post Office Savings Account
Post Office Savings Account has a perpetual nature. Tenure of a Post Office Savings Account is indefinite which means that it offers the flexibility to maintain the account for as long as you need.
Post Office Savings Account Withdrawal and Nomination
Account holders have full flexibility of withdrawing funds as and when needed because the account is very liquid. However, no withdrawal will be permitted which effects reducing of minimum balance Rs.500.
Additionally, with the nomination facility available in post office savings account, one can rest assured that the accumulated wealth seamlessly passes to the nominee in the event of the account holder's demise. It helps in simplifying unnecessary legalities for the family.
Post Office Savings Account Taxation
As per section 80TTA of the Income Tax Act, interest up to Rs. 10,000 earned from all Savings Bank Accounts in a financial year is exempted from tax.