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Small Savings

Small Savings schemes are designed to provide safe and attractive investment options to the public and at the same time mobilise resources for development. These schemes are operated through 1.54 lakh post offices in the country. Public Provident Fund Scheme is also operated from 8000 branches of public sector banks in addition to the post offices. Deposit Schemes for retiring employees are operated through selected branches of public sector banks only.

Post Office Savings Schemes
What are small savings?
FAQ's

National Pension Scheme NPS

National Pension Scheme (NPS)
National Pension Scheme (NPS) India is a voluntary and long-term investment plan for retirement under the purview of the Pension Fund Regulatory and Development Authority (PFRDA) and Central Government. We have covered the following in this article. The scheme encourages people to invest in a pension account at regular intervals during the course of their employment. After retirement, the subscribers can take out a certain percentage of the corpus. As an NPS account holder, you will receive the remaining amount as a monthly pension post your retirement. Earlier, the NPS scheme covered only the Central Government employees. Now, however, the PFRDA has made it open to all Indian citizens on a voluntary basis. NPS scheme holds immense value for anyone who works in the private sector and requires a regular pension after retirement. The scheme is portable across jobs and locations, with tax benefits under Section 80C and Section 80CCD.

Who should invest in the NPS?
The NPS is a good scheme for anyone who wants to plan for their retirement early on and has a low-risk appetite. A regular pension (income) in your retirement years will no doubt be a boon, especially for those individuals who retire from private-sector jobs. A systematic investment like this can make a massive difference to your life post-retirement. In fact, Salaried people who want to make the most of the 80C deductions can also consider this scheme.

Features & Benefits of NPS

-Returns/Interest
A portion of the NPS goes to equities (this may not offer guaranteed returns). However, it offers returns that are much higher than other traditional tax-saving investments like the PPF. This scheme has been in effect for over a decade, and so far has delivered 8% to 10% annualised returns. In NPS, you are also allowed the option to change your fund manager if you are not happy with the performance of the fund.

-Risk Assessment
Currently, there is a cap in the range of 75% to 50% on equity exposure for the National Pension Scheme. For government employees, this cap is 50%. In the range prescribed, the equity portion will reduce by 2.5% each year beginning from the year in which the investor turns 50 years of age. However, for an investor of the age 60 years and above, the cap is fixed at 50%. This stabilizes the risk-return equation in the interest of investors, which means the corpus is somewhat safe from the equity market volatility. The earning potential of NPS is higher as compared to other fixed-income schemes.
-Tax efficiency – NPS tax benefit
There is a deduction of up to Rs.1.5 lakh to be claimed for NPS – for your contribution as well as for the contribution of the employer. – 80CCD (1) covers the self-contribution, which is a part of Section 80C. The maximum deduction one can claim under 80CCD (1) is 10% of the salary, but no more than the said limit. For the self-employed taxpayer, this limit is 20% of the gross income. Section 80CCD (2) covers the employer’s NPS contribution, which will not form a part of Section 80C. This benefit is not available for self-employed taxpayers.

The maximum amount eligible for deduction will be the lowest of the below:

Actual NPS contribution by employer
10% of Basic + DA
Gross total income

You can claim any additional self contribution (up to Rs 50,000) under section 80CCD(1B) as NPS tax benefit. The scheme, therefore, allows a tax deduction of up to Rs 2 lakh in total.

Withdrawal Rules After 60
Contrary to common belief, you cannot withdraw the entire corpus of the NPS scheme after your retirement. You are compulsorily required to keep aside at least 40% of the corpus to receive a regular pension from a PFRDA-registered insurance firm. The remaining 60% is tax-free now. The latest update from the government says that the entire NPS withdrawal corpus is exempt from tax.

Early Withdrawal and Exit rules
As a pension scheme, it is important for you to continue investing until the age of 60. However, if you have been investing for at least three years, you may withdraw up to 25% for certain purposes. These include children’s wedding or higher studies, building/buying a house or medical treatment of self/family, among others. You can make a withdrawal up to three times (with a gap of five years) in the entire tenure. These restrictions are only imposed on tier I accounts and not on tier II accounts. Please scroll down for more details on them.

Equity Allocation Rules
The NPS invests in different schemes, and the Scheme E of the NPS invests in equity. You can allocate a maximum of 50% of your investment to equities. There are two options to invest in – auto choice or active choice. The auto choice decides the risk profile of your investments as per your age. For instance, the older you are, the more stable and less risky your investments. The active choice allows you to decide the scheme and to split your investments.

Savings Account

Salient Features:

Interest:

4.0%/Annum

How To Open An Account?:

The account can be opened by cash only

Minimum Balance:

Minimum balance to be maintained in a non-Cheque facility account is INR 50/-

Minimum INR 20/- for opening, Maximum No Limit

Account Opening:

Cheque facility available if an account is opened with INR 500/- and for this purpose minimum balance of INR 500/-in an account is to be maintained
Cheque facility can be taken in an existing account also Interest earned is Tax Free up to INR 10,000/- per year from the financial year 2012-13

Facilities:

Nomination facility is available at the time of opening and also after the opening of an account
The account can be transferred from one post office to another
One account can be opened in one post office
The account can be opened in the name of the minor and a minor of 10 years and above age can open and operate the account
The joint account can be opened by two or three adults
At least one transaction of deposit or withdrawal in three financial years is necessary to keep the account active
The single account can be converted into Joint and Vice Versa
Minor after attaining majority has to apply for conversion of the account in his name

Deposits and Withdrawals:

Deposits and withdrawals can be done through any electronic mode in CBS Post offices.
ATM facility is available

Monthly Income Scheme Account (MIS)

Salient Features:

Interest:

6.60% per annum payable monthly

Account Opening:

An account may be opened by an individual.
The account can be opened by cash/Cheque and in case of Cheque, the date of realization of Cheque in Govt. account shall be the date of opening of an account

Minimum - Maximum Amount

In multiples of INR 1500/-
Maximum investment limit is INR 4.5 lakh in single account and INR 9 lakh in joint account

Account Facilities:

Nomination facility is available at the time of opening and also after the opening of an account
The account can be transferred from one post office to another
Any number of accounts can be opened in any post office subject to maximum investment limit by adding balance in all accounts
The account can be opened in the name of the minor and a minor of 10 years and above age can open and operate the account
The joint account can be opened by two or three adults
All joint account holders have an equal share in each joint account
The single account can be converted into Joint and Vice Versa
Minor after attaining majority has to apply for conversion of the account in his name
Interest can be drawn through auto credit into savings account standing at the same post office, through PDCs or ECS./In case of MIS accounts standing at CBS Post offices, monthly interest can be credited into savings account standing at any CBS Post offices
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 a deduction from the deposit.)
A bonus of 5% on principal amount is admissible on maturity in respect of MIS accounts opened on or after 8.12.07 and up to 30.11.2011. No bonus is payable on the deposits made on or after 1.12.2011.

Maturity period & Withdrawals:

Maturity period is 5 years from 1.12.2011

Public Provident Fund Account

Salient Features:

Interest Rate:

7.10% per annum (compounded yearly)

Account Opening:

Deposits can be made in lump-sum or in 12 installments

Minimum - Maximum Amount:

An individual can open an account with INR 100/- but has to deposit a minimum of INR 500/- in a financial year and maximum INR 1,50,000/-

Account Facilities:

The joint account cannot be opened
The account can be opened by cash / Cheque and In case of Cheque, the date of realization of Cheque in Govt. account shall be a date of opening of an account
Nomination facility is available at the time of opening and also after the opening of an account. An account can be transferred from one post office to another
The subscriber can open another account in the name of minors but subject to maximum investment limit by adding balance in all accounts
Deposits qualify for deduction from income under Sec. 80C of IT Act
Interest is completely tax-free
Withdrawal is permissible every year from the 7th financial year from the year of opening account
Loan facility available from the 3rd financial year
No attachment under court decree order
The PPF account can be opened in a Post Office which is Double handed and above

Maturity period and Withdrawals:

Maturity period is 15 years but the same can be extended within one year of maturity for further 5 years and so on
Maturity value can be retained without extension and without further deposits also
Premature closure is not allowed before 15 years

National Savings Certificates (NSC)

Salient Features:

Interest Rate:

6.80% compounded annually but payable at maturity.

Minimum - Maximum Amount :

Minimum of Rs. 100/- and in multiples of Rs. 100/- , No Maximum Limit??

Features:

A single holder type certificate can be purchased by, an adult for himself or on behalf of a minor or by a minor.
Deposits qualify for tax rebate under Sec. 80C of IT Act.
The interest accruing annually but deemed to be reinvested under Section 80C of IT Act.

Senior Citizen Savings Scheme (SCSS) Account

Salient Features:

Interest Rate:

7.60% per annum, payable from the date of deposit of 31st March/30th Sept/31st December in the first instance & thereafter, interest shall be payable on 31st March, 30th June, 30th Sept and 31st December.

Minimum - Maximum Amount:

There shall be only one deposit in the account in multiple of INR.1000/- maximum not exceeding INR 15 lakh.

Features:

An individual of the Age of 60 years or more may open the account.
An individual of the age of 55 years or more but less than 60 years who have retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and the amount should not exceed the amount of retirement benefits.
Maturity period is 5 years.
A depositor may operate more than one account in an individual capacity or jointly with a spouse (husband/wife).
An account can be opened by cash for the amount below INR 1 lakh and for INR 1 Lakh and above by Cheque only.
In case of Cheque, the date of realization of Cheque in Govt. account shall be the date of opening of an account.
Nomination facility is available at the time of opening and also after the opening of an account.
An account can be transferred from one post office to another
Any number of accounts can be opened in any post office subject to maximum investment limit by adding balance in all accounts.
A joint account can be opened with spouse only and the first depositor in a Joint account is the investor.
Interest can be drawn through auto credit into savings account standing at the same post office, through PDCs or Money Order.
In case of SCSS accounts, quarterly interest shall be payable on the 1st working day of April, July, October, and January. It will be applicable at all CBS Post Offices.
*Quarterly interest of SCSS accounts standing at CBS Post offices can be credited in any savings account standing at any other CBS post offices.
Premature closure is allowed after one year on deduction of an amount equal to1.5% of the deposit & after 2 years 1% of the deposit.
After maturity, the account can be extended for a further three years within one year of the maturity by giving an application in a prescribed format. In such cases, an account can be closed at any time after the expiry of one year of extension without any deduction.
TDS is deducted at source on interest if the interest amount is more than INR 10,000/- p.a.
Investment under this scheme qualifies for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.

Sukanya Samriddhi Accounts

Salient Features:

Interest:

7.40% Per Annum

Account Openings:

A legal Guardian/Natural Guardian can open an account in the name of Girl Child
A guardian can open only one account in the name of one girl child and maximum of two accounts in the name of two different Girl children

Minimum - Maximum Amount:

Minimum INR. 1000/-and Maximum INR. 1,50,000/- in a financial year. Subsequent deposit in multiples of INR 100/- Deposits can be made in lump-sum No limit on the number of deposits either in a month or in a Financial year

Requirement:

The account can be opened up to age of 10 years only from the date of birth. For initial operations of Scheme, one year grace has been given. With the grace, Girl child who is born between 2.12.2003? &1.12.2004 can open account up to1.12.2015
If minimum Rs 1000/- is not deposited in a financial year, an account will become discontinued and can be revived with a penalty of Rs 50/- per year with minimum amount required for a deposit for that year

Withdrawals:

Partial withdrawal, maximum up to 50% of the balance standing at the end of the preceding financial year can be taken after Account holders attaining age of 18 years.
The account can be closed after completion of 21 years
The normal Premature closure will be allowed after completion of 18 years?/provided that girl is married

Recurring Deposit Account

Salient Features:

Interest:

5.80% per annum (quarterly compounded)

How To Open An Account:

The account can be opened by cash / Cheque and in case of Cheque the date of deposit shall be the date of presentation of Cheque
Nomination facility is available at the time of opening and also after the opening of an account

Minimum - Maximum Amount:

Minimum INR 10/- per month or any amount in multiples of INR 5/-. No maximum limit.

Account Transfers and Facilities:

The account can be transferred from one post office to another
Any number of accounts can be opened in any post office
The account can be opened in the name of the minor and a minor of 10 years and above age can open and operate the account
The joint account can be opened by two adults
The subsequent deposit can be made up to the 15th day of next month if an account is opened up to 15th? of a calendar month and up to last working day of next month if an account is opened between the 16th day and last working day of a calendar month
If a subsequent deposit is not made up to the prescribed day, a default fee is charged for each default, default fee @ 0.05 rs for every 5 rupees shall be charged. After 4 regular defaults, the account becomes discontinued and can be revived in two months but if the same is not revived within this period, no further deposit can be made

Facility:

If in any RD account, there is monthly default amount, ? the depositor has to first pay the defaulted monthly deposit with default fee and then pay the current month deposit. This will be applicable for both CBS and non CBS Post offices.
There is a rebate on advance deposit of at least 6 installments
The single account can be converted into Joint and Vice Versa
Minor after attaining majority has to apply for conversion of the account in his name
One withdrawal up to 50% of the balance allowed after one year. It may be repaid in one lump sum along with interest at the prescribed rate at any time during the currency of the account
Full maturity value allowed on R.D. Accounts restricted to that of INR. 50/- denomination in case of death of depositor subject to fulfillment of certain conditions.
In case of deposits made in RD accounts by Cheque, date of credit of Cheque into Government accounts shall be treated as the date of deposit

Time Deposit Account

Salient Features:

Interest payable:

5.50% - 6.70% per annum according to the scheme opted

Minimum - Maximum Amount:

Minimum INR 200/- and in multiple thereof. No maximum limit.

Features:

An account may be opened by an individual
An account can be opened by cash /Cheque and in case of Cheque the date of realization of Cheque in Govt. account shall be the date of opening of an account
Nomination facility is available at the time of opening and also after the opening of an account
An account can be transferred from one post office to another
Any number of accounts can be opened in any post office
An account can be opened in the name of the minor and a minor of 10 years and above age can open and operate the account
A joint account can be opened by two adults.
A single account can be converted into Joint and Vice Versa
Minor after attaining majority has to apply for conversion of the account in his name.
The investment under 5 Years TD qualifies for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.

Kisan Vikas Patra (KVP)

Salient Features:

Interest:

6.90% compounded annually (Amount Invested doubles in 118 months (9 years & 10 months))

Opening:

The certificate can be purchased by an adult for himself or on behalf of a minor or by two adults
KVP can be purchased from any Departmental Post office

Minimum - Maximum Amount:

Minimum of Rs. 1000/- and in multiples of Rs. 1000/- No Maximum Limit.

Account Facilities:

Facility of nomination is available
The certificate can be transferred from one person to another and from one post office to another
The certificate can be encashed after 2 & 1/2 years from the date of issue.
A single holder type certificate can be purchased by, an adult for himself or on behalf of a minor or by a minor

Taxes:

Deposits qualify for tax rebate under Sec. 80C of IT Act
The interest accruing annually but deemed to be reinvested under Section 80C of IT Act

Transfers:

In case of NSC VIII, transfer of certificates from one person to another can be done only once from date of issue to date of maturity
At the time of transfer of Certificates from one person to another, old certificates will not be discharged. Name of the old holder shall be rounded and the name of the new holder shall be written on the old certificate and on the purchase application(in case of non CBS Post offices) under dated signatures of the authorized Postmaster along with his designation stamp and date stamp of Post office

Small savings schemes are designed to provide safe and attractive investment options to the public and at the same time to mobilise resources for development. These schemes are operated through about 1.54 lakh post offices throughout the country. Public Provident Fund Scheme is also operated through about 8000 branches of public sector banks in addition to the post offices. Deposit Schemes for Retiring Employees are operated through selected branches of public sector banks only.

Can Monthly Income Scheme (MIS) interest be credited to Recurring Deposit (RD) account?
No. There is no provision. Interest amount can be credited to SB account and after that from SB to RD is permissible.

How can I claim payment of deceased account / certificate holder?
The claimant may be the nominee or legal heir. If there is nomination, the nominee can prefer the claim in the prescribed form along with death certificate. If there is no nomination, any one of the legal heirs can prefer the claim in the prescribed form [SB84]. For this death certificate and consent statements of all legal heirs are required. Claim upto one lakh can be settled. If the claim is exceeding one lakh, claims can be settled by legal evidence ie, by probate of will or succession certificate.

How I can get encashment of certificates / account before maturity?
National Savings Certificate - No premature encashment possible. Maturity period is 5 Years. Different Savings Accounts Savings Bank - Can be closed at any time Recurring Deposit - Premature closure permissible after 3 years - only SB rate is permissible Time Deposit - Premature closure permissible after 6 months Monthly Income Scheme - Premature closure permissible after 1 year

How I get duplicate passbook?
Application in the prescribed form or manuscript application may be given by affixing prescribed fee in the form of postage stamp. New duplicate Passbook will be issued by sub post offices only.

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