CHAPTER 2:

REVIEW & LITERATURE

INTRODUCTION OF POST OFFICE

For national postal networks, sometimes called "the Post Office", see
mail. For other uses, see Post Office (disambiguation).
"Post house" redirects here. For other uses, see Post House.

The General Post Office Building in Shanghai, China.

A post office is a customer service facility forming part of a national
postal system. Post offices offer mail-related services such as
acceptance of letters and parcels; provision of post office boxes; and
sale of postage stamps, packaging, and stationery. In addition, many
post offices offer additional services: providing and accepting
government forms (such as passport applications), processing
government services and fees (such as road tax), and banking services
(such as savings accounts and money orders). The chief administrator
of a post office is a postmaster.
Prior to the advent of postal and ZIP codes, postal systems would
route items to a specific post office for receipt or delivery. In 19thcentury America, this often led to smaller communities being renamed
after their post offices, particularly after the Post Office Department
ceased to permit duName

The old General Post Office on Lombard Street, London, in 1803

A Canadian sorting office in 2006

The term "post office" or "post-office" has been in use since the
1650s, shortly after the legalisation of private mail service in England
in 1635. In early Modern England, post riders mounted couriers
were placed ("posted") every few hours along post roads at "posting
houses" or "post houses" between major cities ("post towns"). These
stables or inns permitted important correspondence to travel without
delay. In early America, post offices were also known as "stations".
This term and "post house" fell from use as horse and coach service
was replaced by railways, aircraft, and automobiles.
Today, "post office" usually refers to postal facilities providing
customer service. The term "General Post Office" is sometimes used
for the national headquarters of a postal service, even if it does not
provide customer service within the building. A postal facility used
exclusively for processing mail is instead known as sorting office or
delivery office, which may have a large central area known as a

"sorting" or "postal hall". Integrated facilities combining mail

processing with railway stations or airports are known as mail
exchanges.

History

Indian Post Office at the Mango Orange village, Ooty Road

A post office in Wales, c.1910

Hollywood, California, post office, 2015

There is evidence of corps of royal couriers disseminating the decrees
of the Egyptian pharaohs as early as 2,400 BC and the service may
greatly precede even that date. Similarly, organized systems of
posthouses providing swift mounted courier service seems quite
ancient, although sources vary as to precisely who initiated the
practice. Certainly, by the time of the Persian Empire, a system of
Chapar-Khaneh existed along the Royal Road. The 2nd-Century BC

Mauryan and Han dynasties established similar systems in India and

China. Suetonius credited Augustus with regularizing the Roman
network, the cursus publicus. Local officials were obliged to provide
couriers who would be responsible for their message's entire course.
Locally maintained post houses (Latin: stationes) privately owned rest
houses (Latin: mansiones) were obliged or honored to care for them
along their way. Diocletian later established two parallel systems: one
providing fresh horses or mules for urgent correspondence and
another providing sturdy oxen for bulk shipments. Procopius, though
not unbiased, records that this system remained largely intact was
dismantled in the surviving empire by Justinian in the 6th Century.
The Princely House of Thurn and Taxis initiated regular mail service
from Brussels in the 16th century, directing the Imperial Post of the
Holy Roman Empire. The British Postal Museum claims that the
oldest functioning post office in the world is on High Street in
Sanquhar, Scotland . This post office has functioned continuously
since 1712, an era in which horses and stage coaches were used to
carry mail.
In parts of Europe, special postal censorship offices existed to
intercept and censor mail. In France, such offices were known as
cabinets noirs.

Unstaffed postal facilities

Students attend an unstaffed postal facility

The Inland Letter Office of the London GPO in 1845.

In many jurisdictions, mail boxes and post office boxes have long
been in widespread use for dropoff and pickup (respectively) of mail
and small packages outside of post offices or when offices are closed.
Deutsche Post introduced the Packstation for package delivery (both
dropoff and pickup) in 2001. In the 2000s, the United States Postal
Service began to install Automated Postal Centers (APCs) in many
locations both in post offices (for when they are closed or busy) and
in retail locations. APCs can print postage and accept mail and small
packages.

Schemes offered to customers by post office

The schemes offered to the customers by the post office

include the following
Kisan Vikas Patra
National saving certificate
Monthly Income Scheme
Post Office fixed deposit
Post Office recurring deposit
Public Provident Fund
Senior Citizen Saving Schemes
Sukanya Samriddhi Yojana

KISAN VIKAS PATRA

Kisan Vikas Patra is a saving certificate scheme which was first launched in
1988 by India Post. It was successful in the early months but afterwards the
Government of India set up a committee under supervision of Shayamla
Gopinath which gave its recommendation to the Government that KVP could be
misused. Hence the Government of India decided to close this scheme and KVP
was closed in 2011. However the new Government formed in 2014 decided to
relaunch this scheme following which the scheme was relaunched in 2014.

Who Can Invest

Kisan Vikas Patra can be purchased by:

An adult in his own name, or on behalf of a minor

A Trust

Two adults jointly

Silent features

 Certificate can be purchased by an adult for himself or on behalf of a

minor by two adults.
KVP can be purchased from any Departmental Post office.
Facility of nomination is available.
Certificate can be transferred from one person to another and from one
post office to another.
Certificate can be encashed after 2 & 1/2 years from the date of issue.
Investment Limitations
KVP certificates are available in the denominations of Rs 1000, Rs 5000, Rs
10000 and Rs 50000. The minimum amount that can be invested is Rs 1000.
However, there is no upper limit on the purchase of KVPs.
Tax Benefits
Kisan Vikas Patra does not offer any income tax benefits to the investor.
However, withdrawals are exempted from Tax Deduction at Source (TDS) upon
maturity.
Interest Income
The amount invested in Kisan Vikas Patra would get doubled in 110 months or
nine years and two months. This means KVPs would be giving a return of 7.8
per cent annually.
Withdrawal
The amount of KVP can be withdrawn after 100 months (8 years and four
months).The maturity period of a KVP is 2 years 6 months(30 months).
Premature encashment of the KVP certificate is not permissible. The certificates
can only be encashed in event of the death of the holder or forfeiture by a
pledge or on the order of the courts.
Benefits
There are many Kissan Vikas Patra benefits that you can avail by purchasing
KVP. Some of them are:
One can start a saving habit by buying KVP of the lowest value i.e. Rs.
100. KVP can be bought from Rs. 100 to Rs. 50000 face value (Rs.100,
Rs.500, Rs.1000 Rs.5000, Rs.10000 and Rs.50000. The value that the

holder will receive on completion of eight years and seven months is

declared on the KVP itself.
There is no upper-limit for buying or owning these KVPs.
The most important of the many Kissan Vikas Patra benefits is that,
being a Government scheme that encourages small savings, it is
completely secure. Small investors who want security for their
investment find the KVP ideal.
The fixed rate of interest that assures doubling of the principal amount in
eight years and seven months is secured as it is a government bond.
However, the inflation would erode the value and that cannot be
controlled.
Many finance companies and banks accept Kisan Vikas Patra as collateral
against loan for housing etc.
Kissan Vikas Patra benefits can be availed only by the holder of the KVP
since KVP is issued in the name of the holder and cannot be transferred
without completing due formalities. To get the KVP transferred on any
other name the permission of the Post Master is required.
The value of the Kisan Vikas Patra is the value at issuance and those that
are encashed prematurely get the amount invested with some interest if
they are encashed after a lock-in period of two and half years.
Kissan Vikas Patra benefits do not include being traded in the secondarymarket.
Kissan Vikas Patra benefits include the simplicity of use of these
certificates. KVPs are physical instruments that are held as printed
certificates. There are no demat forms of these certificates.

There are no direct KVP tax benefits since interest accrued on Kisan Vikas Patra
is taxable.
The only KVP Tax benefit is that there is no Wealth Tax liable on Kisan Vikas
Patra. KVP has complete exemption from Wealth-Tax.
The another benefit from the KVP tax benefits available (if it can be called a
benefit) is that at the time of disbursal or encashment of the KVP, tax is not
deducted at source (TDS) but is paid in full to the holder. It is the responsibility
of the holder of KVP to pay the taxes on the interest accrued.

Premature withdrawal of the KVP is also allowed and the full invested amount
and same interest is paid to the holder after two and a half years of issue of the
certificates.
Types
Single Holder Type Certificate Issued to an Adult for himself or on behalf
of a minor to minor
Joint A type Certificate issued jointly to 2 adults payable to both the
holders jointly or to the survivor
Joint B type Certificate Issued Jointly to 2 adults payable either of the
holders to jointly or to the survivor
Investment in this instrument is only allowed to Resident Indians and therefore
NRIs cannot invest in this instrument. HUF is also not allowed to invest in this
investment
A person interested in purchasing this instrument is required to submit an
application in Form A or Form A1 either in person or through an agent of the
small saving scheme.
If the payment is made through cash the instrument is issued immediately.
However if the payment is made through cheque /pay order/demand draft-the
instrument is issued on the date on which the payments gets cleared.
At the time of issue of the certificate the buyer should also request for identity.
Slip which would be requested in case of loss of the certificate and also required
for easy processing of the payment at the time of maturity

 Maturity Period & Interest Rate on Kisan Vikas Patra

The maturity of the Kisan Vikas Patra is 9 years and 2 months & on maturitythe amount invested gets doubled. So if you invest Rs 1000 in this instrumenton maturity i.e after 8 years and 4 months- the amount invested by you will get
doubled to Rs 2000. And therefore the effective interest rate on Kisan Vikas
Patra is 7.8%
Kisan Vikas Patra may be prematurely encashed any time before its maturity in
any of the following circumstances :
On the death of the Holder or any of the Holders in case of the joint
Holders
On forfeiture by a pledge being Gazetted Govt Officer
When ordered by a court of law

NATIONAL SAVING CERTIFICATE

National Saving Certificate (NSC) is the most popular saving scheme among all
the government saving schemes. It is very simple to subscribe and anyone can
take it from the post office. Since many years, people put their saving into this
scheme. It has been very reliable saving scheme and it has been the preferred
tax saving option.

Silent features of national saving certificate

A single holder type certificate can be purchased by, an adult for himself or on
behalf of a minor or by a minor
Deposits qualify for tax rebate under Sec. 80C of IT Act.
The interest accruing annually but deemed to be reinvested under Section 80C
of IT Act.
*In case of NSC VIII , transfer of certificates from one person to another can be
done only once from date of issue to date of maturity.
*At the time of transfer of Certificates from one person to another, old
certificates will not be discharged. Name of old holder shall be rounded and
name of new holder shall be written on the old certificate and on the purchase
application(in case of non CBS Post offices) under dated signatures of the
authorized Postmaster along with his designation stamp and date stamp of Post
office.
Interest Rate on National Saving Certificate (NSC)
The government of India decides the interest rate of NSC. The interest rate of
NSC is linked to the yield of 10-year government bond. It is reviewed every
year before 1st of April. However, the government is planning to review it more
frequently.
The interest rate of NSC does not change during the 5-year tenure of the NSC.
At the time of NSC purchase, you know the maturity value of NSC. It does not
change because of interest rate fluctuation in between.
The Interest rate of NSC is compounded half yearly. But it gets deposited into
the account every year.
The interest rate on 5-year NSC is 8.8% per year. It had been 8.7% for 10-year
NSC. 10-year NSC is discontinued now.
Tax Saving Through NSC
The National Saving Certificate (NSC) gives tax deduction under section 80C.
It means the investment into NSC would be deducted from the taxable income.
Total 1.5 lakh can be deducted for tax saving under section 80C.
The interest earning from the NSC is taxable. Since the interest is accrued every
year, the notional interest is added to the total taxable income of every year.

The interest of NSC is not paid every year, rather it is reinvested at the same
interest rate. This reinvestment of interest is further eligible for tax deduction
under section 80C.
TDS is not applicable on the National Saving Certificate (NSC). So, you dont
need to worry about it.
The taxpayer should show the interest earned as an income while e-Filing
income tax return. Further, this income can be claimed for tax deduction under
section 80C.
Minimum and Maximum Investment in NSC
You have to invest minimum Rs 100 in the National Saving Certificate (NSC)
scheme. There is no such limit for maximum investment. However, the tax
deduction can be claimed of maximum Rs 1.5 lakh.
The National Savings Certificate is issued in denominations of Rs. 100, Rs. 500,
Rs. 1000, Rs. 5000, Rs. 10,000. You can buy any number of NSC certificates of
any denominations. There is no bar.
Type of NSC Certificates
There are 3 types of National Savings Certificate
1. Single holder Type Certificate: It is issued to the holder himself or on
behalf of the minor.
2. Joint A type Certificate: It is issued jointly to 2 adults. It is paid to both of
the joint holders.
3. Joint B type Certificate: This type of NSC is issued jointly to 2 adults
payable to either of the holders.
How to Buy NSC from Post Office
To buy the NSC you have to fill a form. The postal department has specified
this form. You can also download the NSC Application form online. You can get
NSC application form from the post office itself.
Fill the NSC application form and submit the investment amount. You can give
investment amount through the following methods.
Cash

 Cheque, Pay order or Demand Draft drawn in favour of the

Postmaster
By submitting a request for with drawl of funds from the
Post Office Savings Bank Account
By surrendering an old matured certificate. If you choose
this method you have to write in the back of surrendered
certificate that you have Received payment through issue
of fresh certificate, vide application attached
You have to give the self-attested copies of identity and address proof.
After the verification, the postmaster would give you the National Saving
Certificates (NSC) of the desired amount. If the postmaster does not have
required certificates, he/she can give a provisional certificate. You would get the
printed NSC after few days.
The certificates are pre-printed in the different denominations. Keep these
certificates till the maturity; the photocopy of the certificates can be used as the
proof of investment for tax benefit.
Nomination of National Saving Certificate (NSC)
You can also nominate anyone to your NSC certificate. This nomination can be
done at the time of NSC purchase or any time before the redemption.
To nominate someone, you have to fill the prescribed nomination form. You
can also change nomination any time before the redemption. The nominee
would get the maturity value in case the certificate holder dies. The nominee is
required to present the death certificate along with the redemption request.
Transfer of National Saving Certificate (NSC)
You can also transfer the National Saving Certificate (NSC) s to any person.
The transfer can happen only once.
To transfer the ownership of the NSC, you are required to submit the prescribed
transfer form. At the time of ownership transfer, the new certificate would not
be issued. Rather, the old name would be rounded and another name would be
written on the certificate. The change would be also made into the original

application. The post master would certify the NSC transfer by signing over the
NSC.
Loan against the NSC
You can take a loan from the bank by pledging the NSC. Once you receive the
National Saving Certificate (NSC) s from the post office you can approach any
scheduled bank, cooperative bank or cooperative credit society to get a loan.
However, it would be better if you go the bank where you have a saving
account.
After the approval by the bank, you have to go the to the post office. The post
master will write over the certificate about the pledge to the bank. Once the
bank gets the pledged certificate, it would disburse the loan amount. The
interest rate of such loan would be less than the unsecured personal loan.
Redemption of National Saving Certificate (NSC)
The redemption of NSC is quite easy. After the completion of 5 years, you have
to submit the certificates to the postmaster of the concerned post office. The
postmaster would make you write on the back of the NSC that you have
received the maturity amount. It may seem unwarranted before the getting
money, but I had to do that.
The maturity amount would be paid through the account payee cheque. It may
take upto a week for getting the cheque. Since cheques are issued by the main
post office, the local post office takes time in the whole process. The main post
office can process your redemption quite early. I would advise to keep the
copies of NSC before submitting to the postmaster. It will act as a proof. You
can also ask for acknowledgment over the copies of NSC.
The maturity amount would be paid through the account payee cheque. It may
take up to a week for getting the cheque. Since cheques are issued by the main
post office, the local post office takes time in the whole process. The main post
office can process your redemption quite quickly. I would advise you to keep
the copies of NSC before submitting to the postmaster. It will act as a proof.
You can also ask for acknowledgment over the copies of NSC.

Transfer of Post Office

Suppose, you change the city after buying the NSC. In this situation it may be a
real problem of getting back the money from the orginal post office. Thus, there
is a provision of NSC transfer among post offices. There is a prescribed form
for the NSC transfer from one post office to another. You can apply to either of
the post office for the transfer.
Issue of Duplicate NSC Certificate
You can get duplicate certificate, if there is a genuine requirement.
The reason for a duplicate certificate should be any of the following.
o Lost
o Stolen,
o Destroyed
o Mutilated
o Defaced
You have to apply in a prescribed form to get the duplicate NSC
certificate.
The application can be made to the post office where certificate is
registered. However, you can use another post office as well to forward
the application.
Along with the form, you have to write a letter stating the reason of
duplicate certificate. In this letter as well, you have to give all the details
of NSC such as issue date, amount and serial no.
You would be also required to give an indemnity bond in the prescribed
form with one or more approved suerities or with bank guarantee.
A Fee of Rs. 5 would be charged for the issue of Duplicate Certificate.
Interest on National Savings Certificate After Maturity

You would also get the interest after the maturity, if certificate is not redeemed.
The rate of interest would be as much as the saving account of post office. As of
now, it is 4% per year. Such interest would be given maximum 2 years from the
maturity.
Premature Encashment of National Savings Certificate
Normally, you cant redeem NSC before the 5 years. But, under few situations it
is permitted. The reason of premature withdrawal should be any of the
following.
1. On the Death of the NSC Holder or the Holders in case of Joint Holders
2. On forfeiture by a pledge being a Gazetted Government Officer when the
pledge is in conformity with these rules.
3. When ordered by a court of law
If the premature encashment happens within one year of the date of issue, you
would not get any interest. However, after one year the interest is paid.
There would be a penalty for premature encashment as well.

NSC For NRI and HUF

NRIs cant buy National Savings Certificate (NSC). However, NRI can hold
the NSC certificate in case he/she has bought NSC before becoming NRI. The
NRI can encash the NSC after the maturity.
Now HUF cant buy NSC, Earlier it was permitted.
NSC Interest Calculation
The calculation of NSC maturity is very simple. Since it is compounded half
yearly we have to change the interest rate and duration accordingly.
So to get the maturity value of NSC we should convert the interest rate half
yearly. It would be annual interest rate/2. Whereas the period of NSC would be
multiplied by 2. It would be 5*2=10

The simple future value formula would give you the maturity value.
Generally you do not require the annual interest earning of NSC. But for the tax
calculation, it would be necessary to know the annual accrued interest of the
NSC. Accrued interest of every year is added to your taxable income. However
it also becomes eligible for tax deduction under section 80C.
So to calculate in the tax on the interest of NSC, you need to know the interest
every year. This calculator would ease your problem.

POST OFFICE FIXED DEPOSIT

Department of Post, considered the backbone of Indias communications fabric,
with 154866 post offices in the country, is the the largest in the world. With
around 1,39,040 post offices in rural areas alone, the department is further
widening its reach and functioning by diversifying into several domains such as
insurance, money transfer and retail services among others.
The Post Office Savings Bank (POSB) is the oldest and largest banking
institution in the country. It operates over 238 million savings accounts. The
Post Office Savings Bank schemes are a function performed by the Department
of Posts on behalf of the Ministry of Finance.
The eight savings schemes offered by the department are savings accounts,
recurring deposit, time deposit, monthly income scheme, public provident fund,
Kisan Vikas Patras (KVP), National Savings Certificate (NSC) and Senior
Citizens Savings Scheme (SCSS).
India Post Office Time (Fixed) Deposit Scheme
There are currently over 93,55,825 time deposit accounts across the
country. Owing to the benefit of assured returns on the deposit and the
low risk factor, it is one of the sought-after schemes in the country.
The scheme offers several benefits including portability of account from
one post office to another and option of extending the deposit on
maturity. Also, maturity proceeds not drawn are eligible for savings
account interest rate for two years.
The tenures for fixed deposit offered range from one, two and three years
to five years with the facility to draw yearly interest at compounded rates.
Automatic credit facility of interest to the savings bank account is
available.
Group accounts, institutional accounts, Trust, regimental fund or welfare
fund are not permissible.
Although interest income is taxable, TDS certificate is not issued under
the scheme.
Post Office Monthly Income Scheme

In terms of investments that offer assured returns, fixed deposits and recurring
deposits from banks as well as the postal department might be well known to
people from across India. Another lucrative scheme that offers similar rates and
a lot of flexibility is the Monthly Income Scheme (MIS) from India Post and is
available for opening across all post offices.
With a rate of interest as high as 8.40%, this interest is calculated on an annual
basis and payable every month, allowing the account holder to avail a monthly
income on his/her investment. The interest payable can be withdrawn into
savings account at the same post office or if the account is at a CBS post office,
the monthly income can be auto credited into any savings account at any CBS
post office. The interest, if not withdrawn, will not accrue any additional interest
though. The MIS account itself is transferrable to any post office across India.
The account can have a maximum of Rs. 4.5 lakh as individual investment and
Rs. 9 lakh as joint account investment. The maturity period of the account is
five years.
Who can open a fixed deposit account with India Post Office?
Any individual (a single adult or two adults) can open a term deposit account.
How to open an account?
An individual can open an account at any head post office or general post office
after filling out the deposit opening form provided by the post office. The
following documents have to be furnished to facilitate the opening of the
account.
Address and identity proof (passport, PAN card or declaration in form no
60 or 61, driving licence, voters ID or ration card).
Original identity proof for verification.
The individual has to choose a nominee and also get a witness signature
to complete the process.
Procedure to open fixed deposit account
Account may be opened by individual by cash or cheque. If the account is
opened by cheque, the date of realization of cheque will be considered as
the date of opening of account.
Nomination facility is available at the time of opening of the account.

 Account can be transferred from one post office to another.

Account can be opened in the name of any minor of 10 years and above.
The minor after attaining majority can apply for conversion of the
account in his name.
A joint account can be opened by two adults. A single account can be
converted into joint account and vice versa.

Does India Post offer tax saver fixed deposits?

There are no specific tax saver deposit schemes. There is no tax benefit on
deposits under five years. The five-year deposit is, therefore, deductible under
section 80C.
Main features of India post office fixed deposit scheme
Offers 1, 2, 3 and 5 year time deposits. A single adult or two adults can
open an account.
Interest is payable annually but calculated quarterly. Interest income is
taxable.
Minimum investment is Rs. 200 and its multiples. Offers facility of
extending on maturity of an account.
Post office time deposits are meant for investors who can deposit a lump
sum for a fixed period.
The scheme is not only low risk but also offers high capital protection in
that it is backed by the government. The investment, therefore, grows at a
pre-determined rate with assured returns.
If inflation is above the interest rate offered, there are no high returns.
The scheme is, therefore, not insulated from inflation.
The interest rate for a five-year deposit will be notified before April 1
every year. It is usually aligned with G-sec rates of similar maturity with
a spread of 0.25%.

 An individual can borrow against the deposit or withdraw the deposit

prematurely.
Since the scheme is offered by the government of India, it does not
require any commercial rating.
If a deposit is split across varying tenures, only a few deposits will lose
interest in case of any premature withdrawal.

Penalties for premature of withdrawals of Fixed Deposit

Premature withdrawal or closure is permitted after completion of six months of
opening the deposit. The account can be closed after 6 months and before one
year of opening the account, in which case, the amount invested is returned sans
interest to the depositor. If a time deposit of two or three years is withdrawn
prematurely, interest will be paid only for the completed years. (In case of a
bank FD, if a bank imposes penalties, the depositor will be paid interest at a
lower rate than what was opted for).

POST OFFICE RECCURING DEPOSIT SCHEME

About India Post
Commonly referred to as the post office, the Department of Post, also known
as India Post, is the government operated postal system of India. Founded all
the way back in 1774, India Post is a part of the Ministry of Communications
and Information Technology and offers multiple services to the Indian
population like letter post, parcel service, EMS (Enterprise Messaging System),
delivery, freight forwarding, third party logistics, insurance, deposit accounts
and more.
Recurring Deposit from India Post
India Post offers its customers the facility of a 5-Year Recurring Deposit (RD)
Account which is essentially a deposit scheme allowing customers to add to
their savings by investing money which earns interest over a fixed period of
time. An RD is usually opened for a fixed period of time and deposits must be
made at predetermined intervals which may be monthly, quarterly, depending on
the terms and conditions of the deposit scheme. Unlike a fixed deposit, an RD is
not a one-time investment and may be closed before its maturity date. The India
Post Recurring Deposit Account is an ideal investment option for first time
investors or young professionals as it does not require customers to invest large
sums of money towards installments but does earn you handsome interest at the
end of the maturity period.
Features of India Post Recurring Deposit
Customers can open an RD Account with a minimum of Rs 10/- per
month or any amount in multiples of Rs 5/-. There is no maximum limit
on the amount one may wish to invest each month.
You can open an RD Account by paying in cash or by cheque. In case
payment is made by cheque, the date of presentation of the cheque will be
considered as the date of deposit.
Customers can avail the Nomination facility not only at the time of
opening the account but also afterwards.
You can transfer your Recurring Deposit Account from one post office to
another.

 Customers are free to open any number of RD Accounts in any Post

Office of their choice.
Customers making an advance deposit for at least 6 months are entitled to
a rebate.
Customers have the option of converting a Single account to a Joint
account and vice versa.
If the RD Account has been opened by the 15 th of a month, then the
subsequent deposit to the same can be made up to the 15 th of the month. If
the account has been opened after the 16th of the month, up to the last day
of the month, then the subsequent deposit can also be made up to the last
working day of the month.
After attaining majority, a minor must apply for converting the RD
account in their name.
Customers are allowed one withdrawal of up to 50% of the account
balance after one year of opening the account.
Any delay in deposits will attract a default fee at the rate of 5 paise for
every Rs 5 of the deposit amount. If a customer defaults on deposit
payments for 4 consecutive times, the account shall be discontinued and
can be revived in a period of 2 months. However, if the account is not
revived, then no further deposit can be made.
Eligibility
Recurring Deposit Accounts can be opened by individuals as single or as
joint accounts.
An RD Account can be opened in the name of a minor. Minor individuals
aged 10 years and above can open and operate their RD accounts.
Interest Offered
The India Post 5-Year Recurring Deposit Account offers an interest rate of 8.4%
per annum which is compounded quarterly.

POST OFFICE SAVING ACCOUNT

Post office saving account is similar to a savings account in a bank. It is a safe
instrument to park those funds, which you might need to liquidate fully or
partially at very short notice. Post office savings accounts are especially suited
for those living in rural and semi-rural areas where the reach of banks is very
limited.
How to Open Account
The account can be opened at any post office with a minimum balance of Rs.
20. Maximum of Rs. one lakh for single account holder and Rs. two lakhs for
joint account holders can be deposited. There is no lock-in or maturity period.
One can just walk into a post office, meet the clerk, complete the formalities
and the account would be opened.
Who can Open Account
Single account can be opened by an adult, a minor with minimum age of ten
years, or a guardian on behalf of a minor or a person of unsound mind. Joint
account can be opened by two or three adults.
Withdrawl of Money
The amount can be withdrawn anytime subject to keeping a minimum balance
of Rs. 50 in simple account and Rs. 500 for cheque facility accounts.
Interest Paid
Rate of interest is decided by the Central Government from time to time.
Interest is calculated on monthly balances and credited annually. Usually it is
between three to four per cent.
Salient Features
One could decide to close the account anytime.
Nomination facility is available.
Account can be opened by cash only
Minimum amount to be maintained in non-cheque facility account is INR
50/-

 Cheque facility is available if the account is opened with INR 500/- and
for this purpose minimum balance of INR 500/- in an account should be
maintained
Cheque facility can be taken in an existing account also
Interest earned is tax free upto INR 10000/- per year from financial year
2012-13
Account can be transferred from one post office to another
One account can be opened in one post office
Account can be opened in name of minor and a minor of 10 years and
above can open and operate an account
Joint account can be opened by two or three adults
At least one transaction of deposit or withdrawal in three financial years
is necessary to keep the account active
Single account can be converted into joint and vice-versa
Minor after attaining majority has to apply for conversion of the account
in his name
Deposits and withdrawal can be done through any electronic mode in
CBS post office
Inter post office transactions can be done between CBS post office
Income Tax Benefit
Income tax relief is available on the amount of interest under the provisions of
section 80L of Income Tax Act.
Benefit of Large Network
Post offices have the largest service network in India. Post men do their job
even in remote regions of the country. There are places where you could see old
post men riding on bicycles and distributing letters, being awaited so eagerly by
the kith and kin of the people who are far from their families and friends. Reach
of post offices is of course greater than banks and this is the reason behind the
government introducing something like saving accounts through post offices.
They can take the benefit of having saving accounts right to the people who

need them the most. If one is living in a remote corner, sometimes it is better to
have a savings account in a post office rather than a bank. Just because post
office and postman is closer to him.
Interest payables
Interest is payable at the rate of 4% per annum to individuals and joint account
holders

PUBLIC PROVIDENT FUND

What is the Public Provident Fund (PPF) Scheme?
The Public Provident Fund (PPF) Scheme, 1968 is a tax-free savings avenue
that was introduced by the Ministry of Finance (MOF) in India in the year 1968.
Interest earned on deposits in the PPF account are not taxable. Deposits made
towards PPF accounts can be claimed as tax deductions. This makes the PPF
Scheme one of the most tax efficient instruments in India. It was launched to
encourage savings among Indians in general, especially to encourage them to
create a retirement corpus.
Public Provident Fund (PPF) Accounts
People can deposit funds in PPF accounts (Public Provident Fund accounts) for
a fixed period of time to earn returns on their savings. The PPF of interest rate
for the financial year 2015 - 2016 was 8.7%. This rate has been revised in the
Union Budget 2016 for FY: 2016 - 17 to 8.1%.
Since this scheme was launched to encourage savings across income classes,
minimum deposit requirements are very low and affordable. They are also taxfree accounts, easily accessible, safe (being backed by the government) and
simple to understand, making them a popular investment avenue for a large
majority of individuals in India.

PPF accounts can be opened at any nationalised, authorised bank and authorised
branches / post offices. PPF accounts can be opened at specific private banks as
well. These accounts can be opened by filling out the required forms, submitting
the relevant documents and depositing the minimum pay-in at such
branches/offices that have been authorised for the same.
Interest rates are set and announced by the government of India. Interest is
calculated for a financial year according to the rate announced for the said year
i.e. unlike bank FDs the rates are not fixed for the entire tenure of the holding.
The maximum amount that can be deposited in the account is also subject to
change.
The period from April 1st - March 31st i.e. a financial year is considered to be a
deposit year for a PPF account. E.g. for an account opened in November 2010 2011, Year 1 will be April 1st 2011 - March 31st 2012.
Key Features of the PPF Scheme
The main things to note about PPF accounts are outlined below.
Interest rates: Interest rates are announced by the central government
periodically, usually annually. Interest earned is compounded yearly. (The
current rate of interest on a PPF account is fixed at 8.1% p.a.)
Tenure: 15 years; account continuance is allowed beyond maturity for 5
years at every renewal, with or without making additional deposits.
Initial investment/deposit: Rs.100 to open the account
Annual Deposit amount: Rs.500 - Rs.1.5 lakhs per year (can be revised
as per government directive)
Deposit frequency: A deposit has to be made every year, for 15 years, to
keep the account active. Failure to make the minimum annual investment
will render the account inactive.
Deposit modes: Via cash, cheque,PO, DD, online funds transfer; as a
one-time deposit or up to 12 installments.
Withdrawals: Partial premature withdrawals can be made every year
from year 7; withdrawals are subject to conditions. Complete withdrawal
of funds can be made only at maturity.

 Tax advantages: Interests are tax-free and deposited amounts are tax
deductible U/S 80C of the Income Tax Act. Withdrawals are exempt from
wealth tax.
Nomination: Allowed; on opening the account or after.
Fund transfer: Funds/accounts cannot be transferred between people but
can be easily transferred between bank branches or post offices for free.
Loan facility: Loans can be availed against funds held in the PPF
account from year 3 to year 6.
Renewal: Renewal or extension of the scheme is allowed, for an extra 5
years at a time.
Joint accounts: Not allowed.
Benefits of Investing in a PPF Scheme
Some of the key advantages of PPF accounts are stated below.
Attractive long-term investments: With a deposit period of 15 years
and a lock-in period of 7 years, these accounts serve long-term
investment goals. With interest rates compounded annually, effective
returns tend to be more attractive vis-a-vis bank FDs.
Useful for retirement planning: Long-tenures, compounded, tax-free
returns and capital protection make this an ideal option for building a
retirement corpus.
Tax-free returns: Tax-free interest and withdrawals and tax-deductible
investments.
Low-risk: Being government-backed, there is low risk of default.
Easily accessible: PPF accounts can be opened at nationalised, public
banks or post offices and select private banks, all of which have wide
reach. Accounts can be opened online as well.
No attachment: PPF funds cant be attached under court order or laid
claim to by creditors.
PPF Scheme Account Rules and Regulations

There are a number of rules and regulations governing the Public Provident
Fund Scheme, 1968. These pertain to eligibility and documentation
requirements, opening, maintenance and operation of a PPF account including
loan facilities, withdrawals, closure and extension of accounts, among other
things. Key rules have been discussed in detail below.
Eligibility - Who can open a PPF Account?
Only one PPF account can be opened per person. Resident Indians, 18
years or older, can open a Public Provident Fund Account. There is no
upper age limit for opening this account.
Accounts can be opened for minors. Minors are those below the age of 18
years. However, the maximum limit of Rs.1.5 lakhs per year applies to
deposits made in the minor and the majors/guardians account,
collectively. Grandparents cannot open an account in the names of their
minor grandchildren.
Non-resident Indians (NRIs) cannot open a PPF account. However,
account-holders who leave the country and obtain non-resident status
after having opened a PPF account can continue to maintain their
accounts until it matures i.e. until the end of the accounts 15 year term.
NRIs are restricted from extending account tenures at maturity.
HUFs cannot open a PPF account, effective 2005. Those accounts opened
by HUFs before May 13, 2005 can be continued until maturity without
further extensions. An individual cannot open an account for an HUF
(Hindu Undivided Family).
Foreigners cannot open a PPF account.
Documents needed to open a Public Provident Fund Account (PPF a/c)
Documents required to open a PPF account are KYC documents such as identity
proof, address proof and signature proof. These commonly include the latest
version of a persons
Passport, PAN Card, Aadhar Card, Driving License, Voters ID,
Employers letter, Utility Bill, Rental/Lease Agreement, Bank Account
Statements, Ration Cards, Signed Cheque
Photographs

 The account opening form, along with nomination form if nominees are
being named.
This is not an exhaustive list. Banks may request additional documents if
necessary.In case of minors, age proof will be required i.e. the minors
birth certificate or school certificate.
Opening a PPF Account
PPF accounts can be opened either by visiting a post office or bank-branch or
online via internet banking. Operating accounts online is gaining increasing
popularity among the masses owing to the convenience it offers. An account can
be opened for Rs.100 but the total deposit for the year should be a minimum of
Rs.500.
At a post office or bank
Accounts can be opened by visiting a post office or branch of a bank that
has been authorised for this purpose. The required forms can be obtained,
filled in and submitted along with the required documents (mentioned
above). An initial deposit has to be made to open the account. Banks and
post offices act as agents for the government under whose purview the
PPF scheme falls.
Online
Accounts can also be opened online by visiting a banks official website
or through third-party financial services providers sites that provide such
services. Opening accounts online with a bank is primarily subject to the
terms and conditions laid down by the bank. By opening an account
online, users save time, effort and travel costs. Many banks offer
additional facilities such as linking savings accounts, viewing online
account statements and online fund transfers.
Traditionally, accounts were opened primarily through post offices but
with online banking gaining popularity, more investors are opting to open
accounts with banks which try to woo customers with value added
services such as instant account balances and mobile updates.
Banks authorised to open PPF Accounts in India
PPF accounts can be opened in authorised banks and authorised bank-branches
only. Although an account is held at a banks branch, it is still a government-run

scheme. Fund rules apply irrespective of where the account is held. PPF account
transfers can be effected between bank-branches.
A list of banks 2016 (public and private sector banks) where PPF accounts
can be opened
Alternatively, authorised branches are listed on every banks website or are
made available at your nearest branch.
Public sector banks

Private sector banks

State Bank of India PPF

ICICI Bank

State Bank of Travancore PPF

Axis Bank

State Bank of Hyderabad PPF

State Bank of Mysore PPF
State Bank of Bikaner and
Jaipur PPF
State Bank of Patiala PPF
Allahabad Bank PPF
Bank of Baroda PPF
Bank of India PPF
Bank of Maharashtra PPF
Canara Bank PPF
Central Bank of India PPF
Corporation Bank PPF
Dena Bank PPF
IDBI Bank PPF

Indian Overseas Bank PPF

Oriental Bank of Commerce PPF
Punjab National Bank PPF
Union Bank of India PPF
United Bank of India PPF
Andhra Bank PPF
Vijaya Bank PPF
Punjab and Sind Bank PPF
UCO Bank PPF
Public Provident Fund (PPF) Forms
There are various forms pertaining to PPF accounts. They are Forms A to H,
each of which are issued for a specific purpose.
Form A - To open a Public Provident Fund Account (PPF Account)
This is the form issued to those opening a new PPF account. It will
require key particulars of the account holder such as name, address, PAN
card and signature to be filled in. The amount being deposited will also
have to be specified. In case of minors, particulars such as the minors
name, guardians name and relationship with the applicant will be
required. If the account is being opened by an agent, the agents name
will have to be filled in.
Form B - To make deposits into / repay loans taken against a PPF
account
This is used to deposit or pay money into an account. These deposits or
pay-ins may be investments, repayments for a loan taken against the
account or payment of penalties to reactivate an inactive account.
Investments have to be made every year to keep the account active. Loans
can be availed from year 3 to year 6, counted from the year of account
opening. Amounts can be deposited via cash, cheque, PO, DD or internet

banking. This has to be specified in the pay-in slip. In case accounts are
opened and deposits made through an agent, the agents name and code
has to be entered in the form.
Form C - To make partial withdrawals from a PPF account
Certain sums of money can be withdrawn from the account from year 7
of opening the account. This form is an application to withdraw such
amounts. The form requires the applicant to fill in the account number
and the amount to be withdrawn as well as a declaration stating no other
amounts were withdrawn during the same financial year.
Form D - To request a loan against a PPF account
Account holders can utilise the loan facility provided under the scheme
from year 3 to year 6 of an active account. Details to be specified are the
PPF account number, the amount being borrowed and an undertaking that
the amount will be repaid with interest within 3 years as per the rules.
Form E - To add a nominee to a PPF account
More than one person can be nominated for a single PPF account. The
names of such persons, along with their addresses and relation to the
account holder has to be specified in the form. In case more than one
nominee is stated, the percentage of funds that can be claimed by each
nominee will have to also have to be specified. Nominations cannot be
made for minors' PPF accounts.
Form F - To make changes to PPF account nomination information
This form is to be used to cancel or alter nominees for a particular PPF
account. The account holder will have to specify when the nominee being
cancelled/replaced/altered was named so. Nominees can be added,
removed at any time during the PPF account tenure. The percentage
allocated to each nominee can also be altered.
Form G - To claim funds in a PPF account by a nominee/legal heir
When an account holder dies, those whom he/she stated as nominees or
his/her legal heirs, can claim the amount in his/her PPF account. To do so,
Form G will have to be filled out with required details such as the
name(s) of the nominee(s)/heir(s) of the account holder. The form asks

for confirmation from the claimant that the death certificate of the
account holder has been enclosed.
Form H - To extend the maturity period of a PPF account
The standard tenure for a PPF account is 15 years after which the investor
can withdraw funds held therein, completely and freely. However, if a
PPF account holder wishes to extend the term of the account beyond 15
years, he/she can do so for a further 5 years by submitting this form. The
account number and date of account opening will have to be specified.
Interest Rates for PPF Accounts
The Public Provident Fund Scheme is a fixed-income, debt investment offered
by the government. It is the central government who sets and announces the
latest PPF interest rates. The rate currently stands at 8.1% p.a. for the year
2016-2017
The table below represents PPF interest rates for the last 15 years.
Financial Year
2016 2017
2015 2016
2014 - 2015
2013 - 2014
2012 - 2013
2011 - 2012
2010 - 2011
2009 - 2010
2008 - 2009
2007 - 2008
2006 - 2007
2005 - 2006
2004 - 2005
2003 - 2004
2002 - 2003
2001 - 2002
2000 - 2001

Interest rate (p.a.)

8.1%
8.7%
8.7%
8.7%
8.8%
8.6%
8.0%
8.0%
8.0%
8.0%
8.0%
8.0%
8.0%
8.0%
9.0%
9.5%
11.0%

Interest is compounded annually and credited at the end of every financial year.
Interest is calculated as per the rate announced for a particular financial year i.e.
the rate does not remain fixed for the entire tenure. E.g. Considering the table
above, if the account was opened in the year 2011 - 2012, interest would have

been calculated @ 8.6% p.a. for the first year, @ 8.8% p.a. for the second year
(2012 - 2013), @ 8.7% p..a for the third, fourth and fifth year (2013 - 2014,
2014 - 2015, 2015 - 2016).
Amounts deposited into the account before the 5th of a particular month are
considered for calculations. Thus, deposits should ideally be made from the 1st
to the 5th of any month in order to maximise returns. E.g. if an account shows a
balance of Rs.1,00,000 on Sept. 1st and a deposit of Rs.50,000 is made on Sept.
7th, interest will be calculated on Rs.1,00,000 for the month of September not
Rs.1,50,000.
Interest earned on amounts held in PPF accounts are tax-free, which acts as a
major draw for investors looking to maximise returns. The interest rate has, over
the past decade, been within the 8% p.a. mark. With no major fluctuations in
rates, it is a fairly stable option for risk-averse investors.
Compounding serves to make PPF rates of interest more attractive. The earlier
people invest and stay invested in this scheme, the more they stand to earn at
maturity. A rise in interest rates, coupled with the raising of the deposit ceiling
over the years, has enhanced returns to depositors.
Factors affecting PPF Interest Rates
PPF account interest rates are ascertained by the government of India based on
prevalent economic conditions, It is usually set in line with or above inflation
rates at a premium of a quarter or half percent (0.25% to 0.50%) on rates of 10
year-government bonds.
Minimum and Maximum PPF Deposits
The minimum deposit required to be made every year is Rs.500. The maximum
that a person can deposit in a year is currently Rs.1.5 lakhs.
Failure to make an annual deposit, in any year, will lead to inactivation of the
account. Deposits can be made in a lump sum i.e. the entire amount to be
invested can be paid-into the account at one time, or it can be spread over 12
installments in a year or spread over up to 2 installments a month.
(The government can, if it sees fit, change PPF deposit limits. Even as it
increased the ceiling from Rs.1 lakh to Rs.1.5 lakhs in Aug. 2014, provisions
were put in place, for those who wished, to invest an additional Rs.50,000 to
meet the new investment limit by the end of FY15).
Defaults, Inactivation and Reactivation of PPF Accounts

Money has to be deposited every year to keep a PPF account active. At the very
least, the minimum requirement of Rs.500 should be met. If this isnt done for
any financial year, during the 15-accounts year tenure, the account is deemed
inactive.
To reactivate the account, an account holder has to pay a penalty of Rs.50. The
penalty applies for each year the account has been inactive. For e.g. if an
account holder failed to make the minimum investment in year 3, year 4 and
year 5 , the account is deemed inactive in year 3. It retains its inactive status for
year 4 and 5 and it would have remained inactive except he decides to reactivate
it in year 6. To revive his inactive PPF account, he/she will have to pay Rs.50
for the 3 inactive years i.e. Rs.150. In addition, he/she will have to deposit an
amount equal, at least, to the minimum investment for each year i.e. Rs.500 * 3
= Rs.1,500 and Rs.500 for year 6 i.e. Rs.1,500 + Rs.500 = Rs.2,000.
Loan and withdrawal facilities cannot be availed while a PPF account is
inactive. Also, interest will not be earned during the year(s) the account is
inactive.
Withdrawals or Closure of a PPF Account
PPF accounts cannot be closed before maturity i.e. before the end of year 15.
Even if an account becomes inactive, funds accrued therein cannot be
withdrawn until the end of the 15 year. On completing 15 years, the entire
amount held in the account, along with the interest accrued, can be withdrawn
freely and the account can be closed.
However, if account holders are in need of funds, the scheme permits partial
withdrawals from year 7 i.e. on completing 6 years. The amount that can be
withdrawn is capped as the lower of
50% of the total balance at the end of the fourth year, counting back from
the year of withdrawal OR
50% of the total balance at the end of the year before the year of
withdrawal Withdrawals can be made only once in a financial year.
Extension or Rrenewal of PPF Accounts (Maturity Options)
Although accounts mature at the end of the 15th financial year from the year the
account is opened, account holders can choose to extend the tenure. Tenures can
be extended in 5-year blocks with or without making further investments.

 If no fresh investments are made after maturity, the account can

continue earning interest on the amount accrued in the account until the
end of year 15. Also, in this case, funds can be withdrawn freely once
every financial year.
If fresh investments are made after maturity, the new deposits will be
added to the balance held at the end of year 15 and interest will be
calculated on the entire amount. However, in this case, withdrawals will
be restricted to a maximum of 60% of the amount held in the account at
the start of each 5-year period of extension.
Tax Advantages of Investing in the PPF Scheme
Tax benefits available on these accounts make these investment options very
attractive, especially for those using this scheme to build a retirement corpus.
PPF deposits fall under the EEE (Exempt, Exempt, Exempt) tax category.
o Deposits made under this scheme can be claimed as deductions
under section 80C.
o Interest earned on these deposits are not taxable.
o Amounts withdrawn from the account are exempt from wealth tax.
Amounts deposited in a spouses or childs PPF account also qualify for
tax breaks.
PPF Calculator
A PPF calculator is an online financial tool offered for free. It is usually featured
on a banks/post offices website or on third-party financial services provider
sites. It is useful to those investing under the PPF scheme.
It helps account holders or potential depositors calculate interest on PPF
deposits and maturity amounts. It also helps ascertain the investment
required for certain desired returns. It delivers results in a user-friendly
manner often in the form of charts or tables which clearly indicates how
much has accrued in the account as principal, how much has accrued as
interest, and how much to expect on maturity.

 It helps users ascertain how much they stand to gain if they choose to
extend their maturity period; under both circumstances i.e. with or
without additional deposits.
In the case of PPF loans, loan repayments and withdrawals, the PPF
deposit calculator is a handy tool to make quick calculations to arrive at
the latest account balances after accounting for all debits. With accurate
results, PPF accounts as an investment can be tracked and compared with
other instruments like other post office saving schemes, FDs, RDs,
Mutual Funds etc. to check returns and make informed investment
choices.
Given that investments can be made either in a lump sum or in
installments, calculations can get tedious and confusing when the latter is
chosen. Also, considering interest rates are subject to change every year,
balances will have to be carefully calculated to account for rise or falling
rates. Deposit calculators can help with this.
There are also limitations to borrowing and withdrawing from a PPF
account. PPF calculators help account holders determine how much they
can borrow or withdraw based on these limitations.

SENIOR CITIZEN SCHEME

Overview about Senior Citizen Saving Scheme (SCSS)
In every human society, the elders or the senior citizens are given the pride of
place. These individuals have spent a lifetime working, creating life and
chiseling paths in the roughest terrains for the ease of the generations that are to
follow them. And, the collective society hasnt forgotten these contributionshonoring its elders with many facilities and considerations that are tasked to
make the lives of our older generation better. When it comes to saving schemes
for senior citizens in India, the government has a wide collection of very
attractive programs in store.
About Senior Citizen Saving Scheme in India
Designated for individuals above the age of 60, the Saving Schemes for senior
citizens in India are effective, long term saving options and offer unmatched
security and features that are usually associated with any government sponsored
savings program. These schemes are available through certified banks as well as
the network post offices spread across India. The typical Senior Citizen Saving
Scheme (SCSS) account extends upto 5 years and upon maturity can be
subsequently extended for an additional 3 years. The depositor is allowed to
make one deposit into this account, an amount that is a multiple of Rs.1,000 and
not extend beyond Rs.15 lakhs. SCSS accounts are robust, safe, highly targeted
and a long term savings prospect. After spending a lifetime supporting others
and running in the mad rat race of life, the various senior citizen saving schemes
in India offer the aged folk a medium of effective savings for their twilight
years.
Features of senior citizen schemes
An individual of age of 60 years or more can open a account
An individual of age of 55 years or more but less than 60 years who
has retired on superannuation or under VRS can also open account
subject to the condition that the account is opened within one month
of recepit of retirement benefits and amount should not exceeed the
amount of retirement benefit
Maturity period is 5 years
A depositor can operate more than one account in individual capacity
or jointly with spouse (husband/wife)
Account can be opened by cash for amount below INR 1 lakh and for
INR 1 lakh and above by cheque only

 In case of cheque the date of realization of cheque in Government

account shall be date of opening of account
Nomination facility is available at the time of opening and also after
opening the account
Any number of account can be opened in any post office subject to
maximum investment limit by adding balance in all account
Joint account can be opened with spouse only and first depositor in
joint account is investor
Interest can be drawn through auto creditinto saving account standing
at same post office through PDCs or money order
In case of SCSS account quarterly interest should be payable at the 1 st
working of April, July, October and January. It will be available at all
CBS Post office
Quarterly interest of SCSS account standing at CBS Post office can
be credited in any saving account standing at any other CBS post
office
Premature closure is allowed after one year on deduction of amount
equal to 1.5% of the deposit and after 2 years 1% of deposit
After maturity the account can be extended for further three years
within one year of maturity by giving application in prescribed format.
In such cases, account can be closed at any time after expiry of one
year of extension without any deduction.
TDS is deducted at source on interest if the interest amount is more
than INR 10,000/- p.a
Investment under this scheme qualifies for the benefit of Section 80C
of the Income Tax Act, 1961 from 1.4.2007.
Benefits of Senior Citizen Saving Schemes
As a savings and investment product for the 60+ year olds, the Senior Citizen
Saving Scheme is a heaven-sent. Boasting of one of the best interest rates for
any government sponsored investment product in India, the senior citizen
saving scheme is customized to suit the specific requirements of an investment
minded senior citizen. The salient features and benefits of this option are as
follows1. Easily Available- Fill up a simple application form at your local bank or
post office and you are set.
2. Reliability- This is a Government of India sponsored investment product
and comes with all the security and assurance associated with that tag.

3. Multiple Accounts- A single applicant can open multiple SCSS accounts,

either individually or with a joint investor (must be the spouse of the
primary investor).
4. High Returns- At 8.6% per annum, the returns on your SCSS accounts
are very impressive.
5. Flexible Tenure- The account has a tenure of 5 years but can be stretched
to add another 3 years. Thus, your senior citizen saving scheme serves as
either a medium range investment or a long term plan.
6. Save Tax- As per the dictates of Section 80C, Income Tax Act, 1961, the
TDS can be saved.
7. Choose Your Investment- Only one investment is allowed per SCSS
account. This amount must be a multiple of Rs.1000 and not exceed
Rs.15 lakhs. Thus, the SCSS investment is immensely affordable and
scalable.
8. Premature Termination- In extreme financial duress, your SCSS
account can be closed and the money accessed. While this option only
applies after the account has existed for a minimum of one year, it still is
a ready source of funds that can be called to help at a moments notice.
However, after 1 year, a penalty of 1.5% of the funds in the SCSS
account will be deducted while the same is 1% after the completion of 2
years.
9. Minimum Documentation- KYC documents that prove your age. The
documents that can be submitted to substantiate this are- Passport/ Birth
Certificate/ Voters ID/ Senior Citizen Card/ PAN, etc.
Eligibility for Senior Citizens Saving Schemes in India
In order to qualify for the saving schemes for senior citizens in India, said
applicant must be1. Aged 60 years or above.
2. Must be aged 55 years or above, but less than 60 years, provided he/she
has retired from his/her employment as per VRS/superannuation and
must open said SCSS account within one month of the receipt of
retirement benefits. Also, the invested amount must not exceed the
amount of the retirement benefits.

3. In case of a joint account, the eligibility is decided per the

aforementioned age requirements of the primary depositor. There is no
age restrictions/requirements imposed on the second applicant.
Senior Citizen Saving Schemes Interest Rates
A lucrative, savings oriented investment option, the senior citizen saving
schemes interest rate is set at 8.6% per annum (FY 2016-2017). Instead of
parking their savings in the low yield savings bank accounts or risky
propositions like mutual funds, the senior citizen saving schemes offer the
Indian senior population the option to invest in a safe, high yielding and popular
savings portfolio.
Senior Citizen Saving Scheme Rules
A structured approach is crucial for success and peace of mind. When looking to
enrol with the senior citizen saving scheme, ensure that you are well aware of
the following conditions1. You must be 60 years or above to enrol. In certain conditions, individuals
in the age group of 55 years and above can also apply successfully.
2. Only one deposit is permitted per SCSS account. The deposit must be in
multiples of Rs.1,000 with a maximum permissible investment of Rs.15
lakhs.
3. Interest on the money accumulated in the SCSS account is payable on
31st March/30th September/31st December in the first instance and
thereafter interest is payable as of 31st March, 30th June, 30th September
and 31st December of each year.
4. Maximum tenure of this saving scheme is 5 years. However, after
maturity, the tenure can be extended for a further 3 years, pending the
application for the same in the designated format.
5. An applicant can operate multiple accounts simultaneously, individually
or with a joint account holder who is the spouse. However, the account
holder must ensure that all requirements pertaining to the validity and
operation of these accounts must be met, including maintaining the
minimum balance.
6. It must be noted that cash is an acceptable medium of investment if the
initial amount is less that Rs.1 lakh. If this amount is larger than Rs.1 lakh
then a cheque must be used.

7. Account can be easily and quickly transferred from one bank/post office
onto another.
8. SCSS provides nomination facility that can be availed at the time of
opening the account or after said account has been in operation for a set
duration of time.
9. If the depositor chooses to terminate the account prematurely then the
following penalty applies- 1.5% of deposit amount after one year and 1%
of the deposit amount after two years. Kindly note that premature closure
of the senior citizen saving scheme account is only possible after the
account has been in operation for a minimum of one year.
10.In case of joint accounts, the primary account holder is deemed the
investor while the second stakeholder must be the primary account
holders spouse.
11.Tax is deducted at source if the accumulated interest on the invested
amount exceeds Rs.10,000 per annum.
12.Accumulated interest is deposited onto a designated savings account,
maintained at the bank/post office, wherein the senior citizen saving
scheme is maintained. These deposits are actioned through the auto credit
facility via money orders or PDCs.
13.Investments in the SCSS account saves tax as per the provisions laid out
in Section 80C of the Income Tax Act, 1961.
In summary, the standard SCSS is a feature rich offering that helps you save for
the medium to long haul while avoiding the common concerns arising from
similarly placed products that are actively promoted by non-governmental
organizations. Its your life and future- safety and reliability are definitely top
priority.
Senior Citizen Saving Schemes Calculator
Often, the dimensions of your senior citizen saving scheme- the tenure, invested
amount and the necessary paperwork & upkeep- will show you the larger
picture while putting the bottom line (ie, the accumulated interest amount) in
the background. Enter the senior citizen saving scheme calculator, a handy tool
that helps you briskly calculate and be completely privy to what your SCSS
account is doing for you.

Remember, the government of India updates the interest rate on its Senior
Citizen Saving Scheme on an annual basis but the same is calculated and paid
out every quarter. As mentioned before, interest is payable as of 31st March,
30th June, 30th September and 31st December of each year. Thus, the task of
the senior citizen saving scheme interest calculator includes the calculation of
the applicable quarterly interest rate. Let us further illustrate this aspect Applicable interest rate on SCSS deposit= 8.6% per annum
Applicable interest rate per quarter= 8.6%/4 quarters = 2.175%
ie, interest accumulated for every Rs.100 = Rs .2.175
ie, interest accumulated for every Rs.1 = (2.175/100)= 0.02175
Hence, for every Rs.1 invested as part of the senior citizen saving scheme in
India, Rs. 0.02175 will be paid out as applicable interest after every 3 months.
By simply multiplying this rate with the invested amount, the applicable interest
rate for that quarter can be ascertained.
A simpler iteration of the above formulae is as follows- Pr/400 wherein, P=
principal amount, r= interest rate per annum.
Tax Benefits of Senior Citizen Saving Schemes
Most of us save monies in strategic investment portfolio or other simpler
instruments while adhering to two set targets- a) Savings for the rainy days in
the future, and b) To save on income tax that must be paid annually and attracts
an almost legendary vile reaction from anybody who is gainfully employed and
is obligated to pay his/her taxes. However, the following are the ground realities
when it comes to Senior Citizen Saving Schemes in India and the associated tax
implications1. If the investment churns out an interest amount in excess of Rs.10,000
per year, then Tax Deducted at Source (TDS) applies. However, interest
that amounts to less than this number is free from tax.
2. All investments made per the SCSS account saves tax in accordance with
the provisions laid out in Section 80C of the Income Tax Act, 1961.
Hence, aside from being a secure, scalable option with high returns, the senior
citizen saving scheme is also a potent tax saver. All the elements are in
alignment when it comes to your SCSS account and the prospect of tax savings.

Senior Citizen Saving Schemes in Post Office

The Indian postal system is an icon when it comes to staying connected with the
grass root levels of the Indian society. No wonder, in this age of email and
digital communication, the humble post box is still a strong contender in the
Indian context, especially in the rural confines of this immense country. This is
also the reason why the government of India actively employs the services of
the Indian Postal system to propagate a plethora of its savings and investment
themed programs. The Senior Citizen Saving Scheme (SCSS) is also offered at
your local post office and just as in the case of the friendly National Savings
Certificate (NSC) and National Savings Scheme (NSS), the SCSS has also
managed to garner in a sizable fan following. Note that the interest amount
generated by the SCSS account can be credited (using PDCs or money order)
onto a savings account that is created in the same post office. Post offices are
also a much preferred option especially amongst the non-urban folk as, they are
deemed to be easily approachable, involves less influx of initial investments
(service charges, account opening, etc.) and are more friendly in terms of the
returns as a very limited number of people and systems are operational between
this government scheme and its intended beneficiary.
Senior Citizen Saving Schemes Offered by Different Banks
Alongside post offices, the Senior Citizen Saving Scheme is also offered by
select banking organizations across the country. In recent times, banking in
India has seen a renaissance of sorts wherein the usage of the latest banking
technology, modernization of pioneering public sector banks and the emergence
of a number of super competitive private sector banking firms has spiced up the
Indian banking scene. Thus, quite naturally, a vast number of people, mainly the
urban and semi-urban population, have a 24x7 relationship with their respective
banks that include a number of portfolios other than the basic savings account.
Into this scene walks the Senior Citizen Saving Scheme that offers a wide range
of senior citizen friendly savings/investment options. Its quite easy for said
citizens to open a SCSS account with their favorite bank rather than the nearest
post office. A mere extension as compared to a whole new relationship.
As of 2004, 24 public sector and one private sector bank are authorized to offer
the SCSS option. The following is the comprehensive list of said banksPublic Sector Banks,
1. Allahabad Bank
2. Andhra bank

3. State Bank of India

4. State Bank of Mysore
5. State Bank of Bikaner and Jaipur
6. State Bank of Patiala
7. State Bank of Travancore
8. State Bank of Hyderabad
9. Bank of Maharashtra
10.Bank of Baroda
11.Bank of India
12.Corporation Bank
13.Canara Bank
14.Central Bank of India
15.Dena Bank
16.Syndicate Bank
17.UCO Bank
18.Union Bank of India
19.Vijaya Bank
20.IDBI Bank
21.Indian Bank
22.Indian Overseas Bank
23.Punjab National Bank
24.United Bank of India
Private Sector Bank- ICICI Bank Ltd.

SUKANYA SAMRIDDHI YOJANA

Save for every girl child in India. Reinforcing this idea, Prime Minister
Narendra Modi launched Sukanya Samriddhi Account Scheme, a small
savings scheme as a part of the Beti Bachao Beti Padhao campaign. It is also
considered a part of the governments initiative to increase the percentage of
domestic savings, which has reduced from 38% of the GDP in 2008 to 30% in
2013. This scheme will encourage parents to save for the education and future
of their girl child.
How to Open the Sukanya Samriddhi Account?
1. Guardian to open the account: The account can be opened only by
parents or legal guardians for upto two girl children. In case of twins or
triplets, an exemption will be made on production of a certificate from
authorised medical institutions.
2. Age Eligibility: A Sukanya Samriddhi account can be opened for a girl
child till she attains the age of 10. The scheme started from 2 December,
2014. An initial grace period of one year has been announced for
convenience. A girl child, who is born between 2 December, 2003 and 1
December, 2004, can open account by 1 December, 2015.
3. Account in the name of the beneficiary: Sukanya Samriddhi Scheme
can only be opened in the name of the girl child. The depositor (guardian)
will be an individual, who deposits amount in the account on behalf of
the minor girl child.
4. One Girl One Account: Only one account can be opened per girl child.
5. Where to open Account: Sukanya Samriddhi account can be opened in
Post Offices or authorised Banks (State Bank of India, Bank of Baroda,
Punjab National Bank, Bank of India, Canara Bank, Andhra Bank, UCO
Bank, and Allahabad Bank, to name the few).
More Information on Sukanya Samriddhi Account
1. Account Transferability: The account can be opened with an amount of
Rs. 1000. It can be transferred from the original location to anywhere in
India as the girl child relocates.

2. Minimum Contribution: A minimum contribution of Rs. 1000 per

account has to be deposited per year. A maximum of Rs.1, 50,000 per
account can be deposited. There is no limit in the number of deposits in a
financial year. The money can be deposited through cash, cheque or draft.
3. Penalty: A penalty of Rs.50 will be imposed if the account is not credited
with the minimum amount.
4. Rate of Interest: The scheme is offering an interest rate of 9.1% per year.
However, it will be revised in April every year and the change will be
communicated subsequently. The interest will be compounded yearly and
directly credited to the account.
5. Term Period: The guardian is expected to deposit amount in the account
only till the completion of 14 years. No deposits after that is required till
the maturity of the account.
6. Withdrawal: A premature withdrawal (at the end of the previous
financial year) of 50% of the accumulated amount is allowed after the girl
child turns 18.
7. Closure of Account: The account can be closed only after the child turns
21. If the money is not withdrawn even after that, it will continue to earn
the interest.
8. Taxation: As per Section 80C of Income Tax Act, the investment (up to
Rs.1.5 lakhs) under the scheme, all the payments including the interest
payment and the total maturity amount will be fully exempted from
taxation.
What Are the Documents Required for Opening an Account?
1. Birth Certificate of the girl child.
2. Address and photo identity proof (PAN Card, Voter ID, Aadhar Card) of
the guardian.
Interest Rates on Sukanya Samriddhi Account Scheme reduced to 8.6 %
In addition to the interest rate on Public Provident Fund (PPF) scheme being
slashed from 8.7 per cent to 8.1 per cent, the interest rates on Sukanya
Samriddhi Account Scheme have also been reduced from 9.2 per cent to 8.6 per
cent. The decision is expected to enable the banks to reduce their deposit rates
and also extend loan and credit to the borrowers at decreased rates.

CHAPTER 3
RESEARCH METHODOLOGY

INTRODUCTION
The purpose of the methodology is to describe the research procedure.
This includes overall research design, the sampling procedure, the data
collection method, and the analysis procedures and methods.
In this descriptive type of research has been done for collecting the
primary data. It includes surveys and fact finding enquiries of different kinds.
The major purpose of descriptive research is description of the state of affair as
it exists at present. Moreover the researcher has no control over the variables
under study; he can only report what is happening or what has happened.

METHODOLOGY:
Study design:
Primary data, which has been collected by interview method. The
primary data was collected through the personal interview of the manager

For secondary data collection method the help of various reference

books have been taken which are mentioned in bibliography and also by way of
surfing through the company website. The secondary data was collected through
websites, brochures and handbook of the company.

QUESTIONNARE
Questionnaire for manager
1. When post office started offering investment alternatives to the
investors

2. What are different types of schemes offered by post office

investors

3. Which are the saving schemes provided to the investor

4. Which schemes offer good return as well as tax benefits

5. Name the schemes offered for the senior citizen

6. What are the benefits offered by sukanya samriddhi yojana scheme

for the girl child

7. What is kisan vikas patra & beneficiary of kisan vikas patra to the
investors

8. Do response from investors for post office schemes is satisfactory

a. Yes
b. No

Questionnaire for the investors

Name of the customers:1. In which scheme of post office have you made investment
2. What are the reasons for selecting post office schemes
a. Recommended by the friend
b. Tax saving
c. Recommended by family
d. Any other reason

3. Do you know all the schemes offered by post office

a. Yes
b. No
4. Do the schemes in which you invested is liquid
a. Yes
b. No
5. Are you satisfied with services offered by the post office
a. Yes
b. No
6. Are you satisfied with the interest rate offered by the scheme in which
you have invested
a. Yes
b. No
7. Do you get timely information from the post office regarding the schemes
a. Yes
b. No
8. How would you rate the overall performance of the post office
a. Highly satisfied
b. Satisfied
c. Neutral
d. Not satisfied

DATA ANALYSIS & INTERPRETATION

1) In which scheme of post office have you invested?
Name of the schemes
Recurring deposit
Kisan Vikas Parta
Monthly income scheme
National saving certificate
Public Provident Fund
Fixed Deposit
Sukanya Smariddhi Yojana

Percentage of investments
20%
25%
17.5%
20%
12.5%
2.5%
2.5%

INVESTMENT IN SCHEMES
RECURRING DEPOSIT
KISAN VIKAS PATRA
MONTHLY INCOME
SCHEME
NATIONAL SAVING
CERTIFICATE
PUBLIC PROVIDENT FUND
FIXED DEPOSIT
SUKANYA SMARIDDHI
YOJANA

2) What the reasons for selecting post office schemes?

Recommended by friend
Tax saving
Recommended by family
Any other reason

15%
17.5%
35%
30%

REASONS

RECOMMENDED BY FRIEND
TAX SAVING
RECOMMEENDED BY
FAMILY
ANY OTHER REASON

3) Do you know all the schemes offered by the post office?

Yes
No

85%
15%

AWARNESS OF THE SCHEME

90
80
70
60

AWARNESS OF THE
SCHEME

50
40
30
20
10
0
YES
NO

4) Do the schemes in which you invested is liquid?

Yes
No

67.5%
32.5%

LIQUIDITY
70
60
50
LIQUIDITY

40
30
20
10
0
YES
NO

5) Are you satisfied with the services offered by the post

office?
Yes
No

72.5%
27.5%

SATISFATION OF SERVICES
80
70
60
SATISFATION OF SERVICES

50
40
30
20
10
0
YES

NO

6) Are you satisfied with the interest rate offered by the

schemes in which you have invested?
Yes
No

70%
30%

INTEREST RATE
70
60
50

INTEREST RATE

40
30
20
10
0
YES

NO

7) Do you get timely information from the post office regarding the
schemes?
Yes
No

55%
70%

TIMELY INFORMATION
70
60
50

TIMELY INFORMATION

40
30
20
10
0
YES

NO

8) How would you rate the overall performance of the post office ?

Highly satisfied
Satisfied
Neutral
Not satisfied

37.5%
17.5%
22.5%
22.5%

OVERALL PERFORMANCE

HIGHLY STAISFIED
SATISFIED
NEUTRAL
NOT SATISFIED