Are you looking to earn more benefits from your hard-earned money? It would be apt to deposit in a post office savings account as it brings dual benefits along with offering higher interest rates than regular banks. Also, depositors won’t have to pay tax on the interest of up to Rs 3,500 in a financial year. When it comes to a joint account, the exemption goes up to Rs 7,000.
The interest rates have significantly declined in recent years. For instance, the interest rate offered by India's largest public sector bank State Bank of India has come down to 2.7 percent annually. But, post office saving accounts are still offering a 4 percent return.
In order to open a savings account at the nearest post office, one would require valid KYC documents along with an initial deposit of Rs 500. Therefore, the interest on the post office savings account is calculated on the minimum balance between the 10th of every month and the last day of the month.
But if the customer fails to even secure the minimum account balance to Rs 500 at the end of the financial year, the post office will cut down Rs 100 account maintenance fee. If the balance comes down to zero, the post office savings account will get automatically closed.
Many retail investors prefer small saving instruments such as post office savings accounts as it gives a better return than the normal savings account. Post office saving scheme is almost risk-free and is treated as a correct option for investors who don’t wish to put their money at risk in hope of better return.
The central government reviews the interest rates offered by this scheme on a quarterly basis and it changes as per the market conditions. For the July to September quarter, the government has kept the interest rate unchanged.