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,
Opening a Post Office Savings Account is a simple 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,
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.
Eligibility criteria for a Post Office Savings Account are minimal and as detailed below.
Minor after attaining majority has to submit fresh account opening form and KYC documents of his/ her name at concerned Post Office for conversion of the in his/ her name.
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
To open an account, individuals need to submit,
| Details | Amount |
|---|---|
| Minimum deposit amount | Rs.500 |
| Minimum subsequent deposit | Rs.10 |
| Maximum deposit | No limit |
| Minimum withdrawal | Rs.50 |
Stepwise process to open a Post Office Savings Account is outlined below.
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 an intense network of post offices across India. It provides immense liquidity.
Post Office Savings Account does not have any lock-in period or maturity dates. Hence, you can access your money anytime you need.
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.
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
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.
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 will easily pass to the nominee in the event of the account holder's demise. It helps in simplifying unnecessary legalities for the family.
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.
Tax liability will be there on the interest received under the savings account. Further, you won't get any tax benefits under the scheme. Interest income from Post Office Savings Account is subject to taxation based on individual's tax bracket and total interest income, TDS will be deducted.
You can take the benefit additional facilities available on PO Savings Account, In order to enjoy below mentioned facilities on your PO Savings Account, you are required submit respective form at concerned Post Office where you are maintaining your account.
| Feature | Post Office Savings Account | Bank's Savings Account |
|---|---|---|
| Availability | Offered by India Post at designated post offices. | Offered by commercial and private banks across the country. |
| Account Opening | Must be opened at a post office. | Can be opened online or at a bank branch. |
| Interest Rate | Fixed rate, currently 4% p.a. | Varies between 3% to 7% p.a. depending on the bank. |
| Minimum Balance Requirement | Low minimum balance requirement (e.g., Rs.500). | Depends on the bank, some accounts are zero-balance accounts. |
| Target Customers | Individuals in rural or semi-urban areas seeking safe savings options. | Individuals looking for modern banking facilities. |
| Access to ATMs | Limited ATM access through India Post ATM network. | Access to nationwide and international ATMs. |
| Online Services | Limited online services; evolving with India Post Payments Bank. | Internet and mobile banking available for easy transactions. |
| Tax Benefits | Interest income up to Rs.10,000 annually is tax-exempt. | Interest income above Rs.10,000 annually is taxable. |
| Cheque Book Facility | Cheque book facility available on request. | Provided by most banks. |
| Transaction Limits | Limited withdrawal options in some cases. | Flexible limits as per bank policies. |
| Additional Features | Simple savings account with limited additional features. | Offers debit cards, credit cards, loans, and investment options. |
| Safety | Fully backed by the Government of India. | Covered under DICGC insurance up to Rs.5 lakhs per account. |
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