India Post (through the Department of Posts) offers a number of Small Savings / Post Office Saving Schemes (also called “National Savings Schemes”) that cater to varied needs — from liquidity, monthly income, long-term wealth building, to tax saving. These are backed (implicitly) by the Government of India, making them low risk.
Because the interest rates are revised every quarter, the numbers here are valid for the quarter 01 July 2025 to 30 September 2025 (unless otherwise mentioned). Always check the latest announcement before investing.
This article will cover:
- List of schemes
- Interest rates & tenure
- Eligibility, features, withdrawal / premature closure
- Tax treatment
- Pros, cons & how to choose
1. List of Post Office Saving / Small Savings Schemes
Here are the main saving instruments available via post offices (or under the small savings programme):
| Scheme | Short name / acronym | Purpose / niche |
|---|---|---|
| Post Office Savings Account | SB / PO-SB | Liquid savings, like a bank savings account |
| Recurring Deposit | RD | For regular monthly saving over fixed term |
| Time Deposit / Fixed Deposit | TD / PO FD | Lump sum deposit for fixed term |
| Monthly Income Scheme | MIS / POMIS | To get fixed interest every month |
| Senior Citizen Savings Scheme | SCSS | For retirees, with higher interest |
| Public Provident Fund | PPF | Long term saving + tax benefit |
| Sukanya Samriddhi Yojana / Account | SSA / SSY | For girl child’s education / marriage |
| National Savings Certificate | NSC | Fixed income + tax saving |
| Kisan Vikas Patra | KVP | Investment that “doubles” in fixed time |
| Mahila Samman Savings Certificate | Women-oriented savings certificate | (recent scheme) |
| Other special schemes | e.g. PM CARES for Children, etc. | Specific goals / demographic targeting |
India Post’s official “Saving Schemes” page lists many of these with current interest rates.
Also, articles like the Cleartax article provide side-by-side comparison.
2. Interest Rates & Tenure (Quarter 01 July 2025 to 30 September 2025)
Below is a summary table of the schemes, their interest rates, and tenures (or lock-in / maturity) for the current quarter. These rates may change in future quarters.
| Scheme | Interest Rate (p.a.) for current quarter | Tenure / Lock-in / Key info |
|---|---|---|
| Post Office Savings Account | 4.00% | No fixed term, withdrawals allowed (liquid) |
| Recurring Deposit (5-year RD) | 6.70% (compounded quarterly) | 5 years |
| Time Deposit / PO Fixed Deposit | 1 yr: 6.90% 2 yr: 7.00% 3 yr: 7.10% 5 yr: 7.50% | Fixed for the deposit period; premature closure allowed under conditions |
| Monthly Income Scheme (MIS / POMIS) | 7.40% (interest paid monthly) | 5 years |
| Senior Citizen Savings Scheme (SCSS) | 8.20% | 5 years, with possibility of extension |
| Public Provident Fund (PPF) | 7.10% (compounded yearly) | 15 years initial; can be extended in 5-year blocks |
| Sukanya Samriddhi Account (SSA / SSY) | 8.20% (annually compounded) | Account matures at 21 years of opening (or early under conditions) |
| National Savings Certificate (NSC) | 7.70% (compounded annually) | 5 years |
| Kisan Vikas Patra (KVP) | 7.50% (compounded annually) | Matures (doubles) in about 115 months (~9 years 7 months) at this rate |
| Mahila Samman Savings Certificate | 7.50% (compounded quarterly) | Special scheme (women) |
Notes / caveats:
- For many schemes (e.g. Time Deposit, RD, MIS, NSC, KVP) the interest rate locked in at the quarter of deposit remains valid for the full tenure.
- For PPF and Sukanya Samriddhi Scheme, the interest rate is applicable per quarter and applied to the current balance.
- Premature closure / withdrawals are possible in many schemes but with penalties and under conditions.
- Some limits (maximum deposit, minimum deposit etc.) apply. (
3. Eligibility, Features, Withdrawal & Premature Closure
Eligibility / Who can invest
- Most schemes are open to resident Indian individuals (including minors, through guardians).
- Some schemes are restricted by age or purpose:
- SCSS: Only senior citizens (60+ or in some cases early retirees) can invest.
- Sukanya Samriddhi Yojana: Only for girl child; can be opened by guardian/parent, for girls up to certain age.
- Joint accounts are allowed in many schemes (e.g. RD, TD, MIS) in certain cases.
- Entities (trusts) may or may not be allowed in certain schemes (e.g. NSC) depending on scheme rules.
Features & Deposit / Minimum / Maximum limits
- Post Office Savings Account (SB):
– Minimum to open: ₹500 in many post offices.
– No maximum limit.
– Withdrawals allowed; has facilities like e-banking, cheque, mobile etc in many POs.
– If inactive for 3 years, the account may be frozen / dormant. - Recurring Deposit (RD):
– Minimum monthly deposit: ₹100 (in many POs) in multiples of ₹10.
– Lock-in: full term (5 years) — premature closure possible after 3 years under reduced interest.
– Loan: allowed up to 50% after certain number of deposits. - Time Deposit / FD:
– Minimum: ₹1,000 (varies) in many POs.
– Premature closure: allowed after 6 months; interest rate penalty applies (lower rate).
– The FD can be pledged as security in some cases. - MIS / Monthly Income Scheme:
– Minimum investment: ₹1,000.
– Maximum: ₹9 lakh for individual account, ₹15 lakh for joint account.
– Premature closure: allowed only after 1 year with penalty (1–2%) depending when you close.
– On maturity, principal is returned; interest is distributed monthly during the term. - SCSS (Senior Citizen Savings Scheme):
– Maximum investment limit: ₹15 lakh.
– Premature withdrawal: allowed after 1 year but with penalty. - PPF:
– Minimum annual deposit: ₹500.
– Maximum deposit in a year: ₹1,50,000 (combined across accounts)
– Withdrawal: partial withdrawal permitted from 7th year onwards.
– Extension: After 15 years, you can extend in blocks of 5 years. - Sukanya Samriddhi Yojana (SSY):
– Deposit limit: currently subject to annual maximum (within 80C limit)
– Withdrawal / maturity: entire account matures at ~21 years; partial withdrawal allowed in certain years for education etc. - NSC (National Savings Certificate):
– Minimum: ₹100 in many cases.
– Pledgeable: NSC can be used as collateral for loans. - KVP (Kisan Vikas Patra):
– Minimum: ₹1,000.
– Lock-in: cannot be encashed before 2.5 years from issue date.
4. Tax Treatment
Understanding the tax implications is important when choosing schemes.
| Scheme | Deduction Under Section 80C (investment) | Taxability of Interest / Maturity | Additional Notes |
|---|---|---|---|
| Post Office Savings Account | No | Interest is taxable. However, interest from savings up to ₹10,000 (bank + post office combined) is exempt under Section 80TTA for non-senior citizens; for senior citizens, under 80TTB. | No deduction on principal |
| Recurring Deposit (5-year) | No | Interest is taxable | No 80C benefit |
| Time Deposit / FD | 5-year FD qualifies under 80C | Interest is taxable | Only 5-year FD is eligible for 80C (not shorter ones) |
| MIS / Monthly Income Scheme | No | Interest is taxable | No 80C benefit |
| SCSS | Yes | Interest is taxable | The investment qualifies for 80C deduction (up to ₹1.5 lakh) |
| PPF | Yes | Interest & maturity are tax-free | This is the classic EEE scheme (Exempt, Exempt, Exempt) |
| Sukanya Samriddhi Yojana | Yes | Interest & maturity are tax-free | Another EEE scheme for the benefit of girl children |
| NSC | Yes | Interest is taxable, but “deemed reinvested” for 80C (for first 4 years) | At maturity, interest and principal both taxable; but you get 80C benefit on the interest accrued (not yet paid) in years 1–4. |
| KVP | No | Interest is taxable | No 80C benefit |
| Mahila Samman Savings Certificate | Likely similar treatment (investment may or may not qualify) | Interest is taxable | As per scheme rules (check current notifications) |
Additionally:
- TDS / Withholding tax: Generally, for interest earned from these schemes, TDS may not always apply (especially in small accounts), but interest is still taxable.
- Account freezing: Matured small savings accounts that remain inactive for 3 years may be frozen. You need to apply for revival.
5. Pros, Cons, and How to Choose
Pros
- Safety / Government backing: These are among the safest investment options, as they are backed by the Government of India.
- Guaranteed returns: Unlike market-linked instruments, these give predictable returns.
- Tax advantages: Many schemes offer deductions under Section 80C and some schemes have tax-free interests / maturity.
- Wide accessibility: Post offices exist in even remote areas, making these available to rural & urban populations alike.
- Diverse options: From liquid saving (SB) to long-term wealth building (PPF, SSY) and monthly income (MIS) — you can pick based on your financial goal.
Cons / Limitations
- Interest rate risk & changes: Rates get revised each quarter; sometimes returns may lag bank or NBFC fixed deposits or inflation.
- Liquidity constraints: Many schemes have lock-ins or penalties for early withdrawal.
- Tax on interest: In many schemes, interest is taxable (except PPF, SSY).
- Lower returns vs riskier assets: Equity / market instruments may outpace these in long term, albeit at higher risk.
- Administrative / procedural hassles: For premature closure, transfers, or revivals, you may have to visit post office physically, fill forms, etc.
How to Choose / Strategy
- For emergency / liquidity, keep some amount in PO Savings Account or short term Time Deposit.
- For monthly income / retirement cash flow, consider MIS, SCSS (for senior citizens).
- For long term goals (15-20 years), PPF and Sukanya Samriddhi are good candidates (with tax benefits).
- For child education / marriage, SSY is ideal (if you have a girl child).
- For tax saving (80C), 5-year TD, PPF, SSY, NSC, SCSS are useful.
- Diversify: Don’t put all money in one scheme; balance between liquidity, growth, safety.
