Even though small savings schemes may not provide huge returns on investment, they are a disciplined way of saving money, irrespective of age. The interest rates offered by the small saving schemes are linked to government bond yields and are revised on a quarterly basis. The post office offers a number of such deposit schemes that come with a sovereign guarantee and tax benefits. Apart from this, the government operates some schemes such as the PPF via public sector banks.

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Among the various schemes that India Post offers, the Public Provident Fund (PPF) scheme, National Savings Certificate, National Monthly Income Scheme and Sukanya Samriddhi Yojana are most popular. People can invest in any of these schemes by opening an account at the post office.

Also read: Tax saving investments: 10 options to help you duck despair during filing season

To open an account, the investor has to get the account opening form from the post office and fill it up along with the KYC form. They will have to indicate the preferred scheme in which they wants to invest.

Here’s a ready reckoner of the features of some small savings schemes:

Public Provident Fund (PPF)

Apart from being one of the safest investment options, the PPF also helps in saving taxes under Section 80C of the Income Tax Act. PPF offers income tax deductions up to Rs 1.5 lakh per financial year and the interest generated from the contribution is also tax exempt.

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Individuals can make a minimum contribution of Rs 500 and the upper limit is Rs 1.5 lakh in a financial year. At present, the scheme offers an interest rate of 7.1 percent per annum (compounded yearly). It has a lock-in period of 15 years, after which individuals can extend the scheme by a block of five years. PPF accounts can also be opened in banks.

National Savings Certificate (NSC)

Another popular small savings scheme is the National Savings Certificate (NSC), which also provides tax benefits to the investor. The minimum deposit in the NSC is Rs 1,000, while there is no upper limit defined for this account. The duration of the scheme is five years. At present, the government is offering a rate of interest of 6.8 percent compounded annually. However, the interest is payable at maturity.

National Monthly Income Scheme

Individuals can deposit a minimum amount of Rs 1,000 in this scheme. The maximum investment limit is up to Rs 4.5 lakh in a single account. In a joint account, the maximum investment limit is Rs 9 lakh. At present, the scheme offers a 6.6 percent interest per annum payable monthly.

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The account cannot be closed prematurely before completing one year. If the investors close the account after one year and before three years, a penalty equal to 2 percent of the principal is deducted by the government. Similarly, if the investor closes the account after three years and before five years, 1 percent is deducted from the principal.

Sukanya Samriddhi Yojana

In a bid to secure the future of a girl child, the government had launched the Sukanya Samriddhi Yojana. The current rate of interest offered by this scheme is 7.6 percent per annum, calculated on yearly basis. The minimum deposit towards the scheme is Rs 250 and the upper limit is Rs 1.5 lakh per financial year. Deposits can be made for a duration of 15 years from the date of opening. However, the scheme will mature after 21 years from the date of account opening or at the time of marriage of the girl child.

Also read: Small saving schemes and their importance for a financial plan

(Edited by : Shoma Bhattacharjee)