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POST OFFICE SCHEMES

BY: ABHISHEK KAPOOR 4111003003

o Indian Post offers several Savings Schemes which are safe and relatively more interest rates than bank deposits Benefits of investing in post office schemes: These schemes are offered by the Government of India Safe, secure and risk-free investment options No Tax Deduction at Source (TDS) Nomination facility is available Nomination can be changed at any time The instruments are transferable to any Post Office anywhere in India Attractive rates of interest

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TYPES OF POST OFFICE SCHEMES:


o Recurring Deposit Account (RDA)

o Post Office Monthly Income Scheme (MIS)


o Time Deposit

o Senior Citizen Scheme


o Kisan Vikas Patra

Recurring Deposit Account (RDA):


o It is one of the best investment option for the low income groups. Basically it is a banking service offered by Department of post, Government of India at all post office counters in the country o Amount of Investments: Minimum investment- Rs. 10 p.m. or any amount in multiples of Rs. 5 Maximum investment- No maximum limit o The deposit shall be paid as monthly installments and each subsequent monthly installment shall be made before the end of the calendar month and shall be equal to the first deposit

o The post-office recurring deposits offers a fixed rate of interest, currently at 7.5 per cent per annum compounded quarterly o Interest is liable to tax o Balance exempt from wealth-tax o No TDS from interest o Account can be continued for another 5 years on year to year basis with interest o Rebate is admissible on advance payment of deposits (6 and 12 months o Nomination facility is available o 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 Office Monthly Income Scheme (MIS)


o MIS provides a source of regular income on a long term basis. This scheme is more beneficial for retired persons. Basically it is meant for investors who want to invest a sum amount initially and earn interest on a monthly basis for their livelihood o Amount of Investments:
Single account Joint account

Minimum investment Maximum investment

Rs 1000

Rs 1000

Rs 3 lakhs

Rs 6 lakhs

FEATURES:
o The duration of MIS is six years o Premature closure of the account is permitted any time after the expiry of a period of one year of opening the account o Investors can withdraw money before three years, but at a discount of 2%. Closing of account after three years have 1% deduction. Returns: o The post-office MIS gives a return of 8% plus a bonus of 10 per cent on maturity o No bonus shall be paid on deposits made in accounts opened on or after 13 Feb, 2006

Tax Considerations: o Interest is liable to tax o Balance exempt from wealth-tax o No TDS from interest Other considerations:

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Only one deposit is permitted Provides a secured monthly pension Nomination facility is available Only individuals can open the account (either single or joint)

Time Deposit
o Time Deposit is a banking service similar to a Bank Fixed Deposit offered by Department of post, Government of India at all post office counters in the country o This scheme is meant for those investors who want to deposit a lump sum of money for a fixed period o Investor gets a lump sum (principal + interest) at the maturity of the deposit. Time Deposit scheme offers a lower, but safer, growth in investment o Amount of Investment: The minimum investment in a postoffice time deposit is Rs 200 and there is no prescribed upper limit on your investment. Account can be opened in multiples of Rs. 50 in single or joint names

o Returns: This investment option pays annual interest


rates between 6.25 and 7.5 per cent, compounded quarterly
Time Period (year) 1 2 3 4 Rate Of Return(%) 6.25 6.5 7.25 7.5

Tax Considerations:
o Interest is liable to tax o Balance exempt from wealth-tax o No TDS from interest

Other considerations:
o Accounts can be opened in name of minor/person of unsound mind o One can take a loan against a time deposit with the balance in your account pledged as security for the loan o Nomination facility is available

Senior Citizen Scheme


o It started with effect from August 2, 2004 o Citizens of 60 years of age and above are eligible to invest o The minimum investment is Rs. 1000 and in multiples of Rs.1000 subject to a maximum of Rs.15 lakh o The deposit will carry an interest of 9% per annum o Premature withdrawal after a period of one year will be allowed, subject to some deductions o Interest is liable to tax

Kisan Vikas Patra


o This scheme is available at all post offices and brokers/agents of UTI, LIC and government schemes o No limit ( available in denominations of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000, Rs. 10000 and Rs 50000) o Maturity period of certificate is 8 years and 7 months o Premature encashment is possible after 2 and half years o Returns: Money doubles in 8 years and 7 months

Tax Considerations : o Interest is not eligible for any tax concession o No TDS from interest Other considerations: o Can be purchased from any post office o Interest is paid only on maturity and cannot be claimed prior to maturity o Can be purchased jointly by two adults o It has been declared as "public security" under the provisions of the Mumbai Public Trust Act, 1950 o Can be purchased in name of minor