Photo courtesy Kutan Ural on Unsplash.
The post office savings account is a scheme offered by the post office that is like a regular savings account. It provides a fixed interest rate and is a secure instrument to deposit funds. There are guaranteed returns generated on the investment which is good for people who require regular income with the least risk. The post office is present throughout the country, having a sizable reach providing access to every section of the society.
Eligibility for the post office savings account-
The savings account can be opened in a post office by completing the application Form-I. Persons who can open an account include; a single adult, two adults jointly (Joint A or Joint B), a guardian on behalf of a minor, or a guardian on behalf of a person with an unsound mind. A minor who has attained 10 years of age can also open an account in their name.
- Number of accounts allowed-
As a single account, only one account can be opened by an individual. This applies even to minors/ above 10 years of age and people with an unsound mind.
- Operation of joint account-
In the case of the death of one of the account holders in a joint account, the surviving account holder will be the sole account holder and he can continue the account. In case the surviving individual already has a single account in his name then the joint account would have to be closed.
- Conversion of Account-
Conversion from a single account to a joint account or from a joint to a single account is not permitted.
- Nomination-
There should be a nomination at the time of opening an account.
- Deposit –
The account can be opened with a minimum deposit of five hundred rupees and the ensuing deposits should not be less than Rs 10. There is no limit for maximum deposit in an account.
- Post office saving account withdrawal and minimum balance –
Withdrawal from the account can be made by filling Form- 2 and presenting the passbook. The minimum withdrawal amount is Rs. 50 and no withdrawal is permitted that will reduce the amount below Rs. 500.
- Cheque book-
A checkbook having 10 leaves can be issued to the account holder in a year by making an application, which would be free of charge. Later on, for the checkbook, an account holder will be charged Rs 2 per cheque leaf.
- Balance confirmation in an account-
A passbook shall be issued to the account holder and he can confirm the balance in his account during office hours by tendering his passbook.
- Post Office Saving Account Interest Rate-
The interest is allowed at the rate of 4 percent on the post office saving account and is calculated on the basis of the minimum balance on the tenth day and the end of every month. There shall be no interest in a month where the balance of credit is below Rs 500, between the tenth day and the end of the month.
The interest is for a sum of whole rupees and is rounded off to the nearest rupee. The amount less than fifty paise would be ignored and that above 50 paise would be treated as a whole rupee.
When an account is closed, interest would be paid up to the preceding month in which the account is closed.
In the case of the death of the account holder, interest is paid up to the preceding month in which the account is closed.
- Silent account-
The account where no transaction has been made for the past 3 years is treated as a silent account. The credit of interest in this account is not considered a transaction and a transaction here is allowed only after revival. This account can be revived on application and submitting KYC documents along with a passbook.
Procedure for opening a post office saving account-
The procedure is as mentioned below-
- Visit the nearest post office.
- Complete the form with the required details.
- Submit the required documents.
ID proof- Aadhar card, electoral photo identity card, ration card, passport, driving license, etc.
Address Proof – Passport, Ration card with current address, electricity bill, telephone bill not more than 3 months old, bank statement with current address.
Photograph-Passport sized photograph. In the case of joint account holders, photos of all the joint holders require to be submitted.
Taxation– Section 80TTA of the income tax act entitles an individual to claim a deduction from all saving bank account with interest up to Rs 10,000.
The investment procedure in a post office savings account is a simple process and since it is backed by the government, it is a risk-free option to park your money. It can be used to meet immediate emergency requirements. There are 1.50 lakh post office branches across India and people from all economic groups are free to open an account in a post office, whether in rural or urban areas.