Post Office Small Savings Schemes: People have always had faith in the Post Office Small Savings Scheme. Actually, these schemes are risk free and give guaranteed returns, due to which these schemes are included in the priority of conservative investors. However, in today's era, everyone is looking for maximum returns on their investment. For this reason many people ignore the Small Savings Scheme. Instead they turn to the capital market. But this assumption is wrong. It is important for someone to balance the portfolio. Therefore, invest a part of the investment in such schemes where you get guaranteed returns (Fixed Income) with 100 per cent security. If there is a loss in the capital market, these schemes will be useful in emergency.
How many types of schemes are there?
India Post is offering many small savings schemes. These schemes are popular, especially among those who do not like market risk. These schemes include:
National Savings Time Deposit Scheme (TD)
National Savings Monthly Income Scheme (MIS)
Public Provident Fund (PPF)
National Savings Certificate (NSC)
Kisan Vikas Patra (KVP)
Sukanya Samdhi Yojana (SSY)
Senior Citizens Savings Scheme (SCSS)
National Savings Recurring
Mahila Samman Savings Certificate of Deposit (RD), 2023
Why is small savings important in portfolio?
Some fixed income products are essential in your portfolio. For this, Post Office Small Savings is the best option. This can provide security to your portfolio. In fact, the funds deposited in these are used by the government for its works. Therefore, the government gives sovereign guarantee on these. The benefit of tax exemption is also available on some of these schemes. Here, returns are given as per the fixed interest. They are not affected by market fluctuations. Whereas returns in stock market, mutual funds, bonds, securities, etc., are market linked.
Time Deposit (TD)
Interest on 1 year scheme: 6.9% per annum
Interest on 2 year scheme: 7.0% per annum
Interest on 3 year scheme: 7.1% per annum
Interest on 5 year scheme: 7.5% per annum
Maximum Deposit: No limit
Minimum Deposit: Rs 1000
Tax Benefits: Tax exemption under 80C on amount invested up to Rs 1.50. But if the interest income is Rs 40 thousand or more then TDS will be deducted. The limit for senior citizens is Rs 50 thousand.
Sukanya Samriddhi Yojana (SSY)
Interest Rate: 8.2% per annum
Maturity: 21 years
Maximum Deposit: Rs 1.50 Lakh
Minimum Deposit: Rs 250
Tax Benefits: EEE Category. That means tax exemption under Section 80C of Income Tax Act on investment of Rs 1.50 lakh annually, tax exemption on interest earned and the amount received on maturity is also tax free.
National Savings Certificate (NSC)
Interest rate: 7.7% per annum
Maturity: 5 years
Maximum deposit: No limit
Minimum deposit: Rs 1000
Tax benefit: Up to Rs 1.50 invested gets the benefit of tax exemption under Section 80C of the Income Tax Act.
Public Provident Fund (PPF)
Interest rate: 7.1% per annum
Maximum investment: Rs 1.5 lakh
Minimum investment: Rs 500
Maturity: 15 years, but option to extend further by 5 years
Tax benefits: EEE category. That means tax exemption under Section 80C of Income Tax Act on investment of Rs 1.50 lakh annually, tax exemption on interest earned and the amount received on maturity is also tax free.
Recurring Deposit (RD)
Interest Rate: 6.7% per annum
Maximum Deposit: No limit
Minimum Deposit: Rs 100 Monthly
Maturity: 5 years, which can be extended for further 5 years.
Tax Benefit: No. If the interest income from RD is more than Rs 40,000 then 10% TDS, for senior citizens this limit is Rs 50,000.
Kisan Vikas Patra (KVP)
Interest Rate: 7.5% p.a.
Maturity: 115 months
Maximum Deposit: No Limit
Minimum Deposit: Rs 1000
Tax Benefits: No
Senior Citizens Savings Scheme (SCSS)
Interest rate: 8.2% per annum
Maturity: 5 years
Maximum deposit: Rs 30 lakh
Minimum deposit: Rs 1000
Tax benefit: Rs 1.50 per annum Rebate under 80C on investment. However, if the interest earned in a financial year is more than Rs 50,000, TDS will be deducted.
Monthly Income Scheme (MIS)
Interest rate: 7.4% per annum
Maturity: 5 years, then a new account can be opened for 5 years on the interest at that time
Maximum deposit: Rs 9 lakh single account, Rs 15 lakh joint account
Tax benefits: No
Mahila Samman Savings Certificate, 2023
Interest Rate: 7.5% per annum
Maturity: 2 years
Maximum Deposit: No limit
Minimum Deposit: Rs 1000
