One of the most widely recognized and easily accessible savings options available in India is the Post Office Savings Account. This account has a minimum and maximum balance requirement of Rs. 500, and individuals are allowed to open only one account in their name. Notably, there is no upper limit on the amount that can be deposited into a Post Office Savings Account.
In essence, the Post Office Savings Account closely resembles a conventional savings account. It is renowned for its high level of security, making it a trusted avenue for depositing funds. Furthermore, it offers the flexibility of full or partial withdrawal on short notice, providing account holders with quick access to their funds in times of need.
What sets these accounts apart is the assurance of a guaranteed return on investment, making them particularly attractive to senior citizens and individuals seeking a reliable source of regular income without exposure to financial risk.
Initial deposit requirement and upper limit for maintained balance : Minimum INR 500/- for opening
Interest payable, Rates, Periodicity etc. : 4.0% per annum on individual / joint accounts
Eligibility for Post Office Savings Account Opening
(i) An individual adult
(ii) Two adults exclusively (Joint A or Joint B)
(iii) A guardian acting on behalf of a minor
(iv) A guardian representing a person of unsound mind
(v) A minor aged above 10 years in their own name
· An individual is permitted to open only one account in their own name as a single account.
· It is possible to establish a single account for a minor or an individual aged above 10 (self-declaration)/a person deemed unfit.
· If one of the Joint account holders passes away, the surviving holder will assume sole ownership. If the surviving holder already maintains an individual account, the Joint account will need to be closed.
· Switching between a single account and a joint account, or vice versa, is not within the permissible guidelines.
· During the process of opening the account, it is obligatory to provide the details of a nominee.
· Upon attaining legal adulthood, a minor must submit a fresh account opening form along with their own KYC documents to the relevant Post Office. This procedure is required to facilitate the conversion of the account into their name.
Deposit Guidelines and Withdrawal Guidelines of Post Office Savings Account
All Transaction (Either Deposit & withdraw) must be conducted using whole rupee (INR) denominations exclusively.
(i) The minimum initial deposit required stands at Rs. 500, and subsequent deposits should not fall below (or less than) Rs. 10.
(iii) There is no specified upper limit for deposits.
(iv)When it comes to withdrawals, the minimum permissible amount is Rs. 50.
(v) Withdrawal transactions causing the account balance to fall below the prescribed minimum of Rs. 500 will not be authorized.
(vi) If the account balance remain below Rs. 500 at the conclusion of the financial year, an Account Maintenance Fee of Rs. 50 will be levied. Additionally, in the event that the account balance reaches zero, the account will be subject to automatic closure.
Interest Calculation Process of Post Office Savings Account
(i) Interest computation will be based on the minimum balance maintained between the 10th day and the last day of the month, with the accrued amount credited using whole rupee denominations.
(ii) If the balance falls below Rs. 500 between the 10th and the last day of the month, no interest will be allocated for that specific month.
(iii) The interest, computed according to the interest rate prescribed by the Ministry of Finance, will be added to the account at the conclusion of each Financial Year.
(iv) Upon account closure, interest will be disbursed up until the previous month in which the closure occurs.
(v) As per section 80TTA of the Income Tax Act, the interest earned up to Rs. 10,000 in a Financial Year from all Savings Bank Accounts is exempted from taxable income.
Process: How to Open Post Office Savings Account
The following these simple steps to open a post office savings account :
Step 1: Visit your nearest post office or the official India Post website to acquire the application form.
Step 2: Fill out the form with accurate information.
Step 3: Provide the relevant documents along with a passport-sized photograph.
Step 4: Make a deposit payment, which must not be below Rs. 20.
Step 5: If you prefer to have a post office savings account without a cheque book, you’ll need to make a minimum deposit of Rs. 50.
Single account holders are allowed to deposit a maximum of Rs. 1 lakh, whereas joint account holders can deposit up to Rs. 2 lakhs. An essential aspect of a Post Office savings account is its lack of a lock-in period or maturity requirement. Initiating this type of account is exceptionally uncomplicated – individuals can conveniently visit any local post office, fulfill the necessary paperwork with the attendant, and promptly commence their account.
Eligibility for Opening a Post Office Savings Account
The following individuals meet the requirements to inaugurate a Post Office savings account:
Minors aged ten years and above.
Guardians representing minors below the age of ten.
Individuals deemed to be of unsound mind.
Joint accounts can be established by two or three adults.
However, it’s important to note that accounts in the form of groups, institutions, and other categories such as official capacity accounts and security deposit accounts are not permitted.
Interest Calculation for Post Office Savings Account
(i) Interest calculation will be based on the minimum balance held between the 10th day and the last day of the month, and it will be credited in whole rupee denominations exclusively.
(ii) No interest will be granted for any month if the balance between the 10th and the final day of the month falls below Rs. 500.
(iii) The interest will be credited to the account at the conclusion of each Financial Year, utilizing the interest rate specified by the Ministry of Finance.
(iv) Upon the closure of the account, the interest will be paid up until the month preceding the closure.
(v) In accordance with section 80TTA of the Income Tax Act, the interest earned up to Rs. 10,000 in a Financial Year from all Savings Bank Accounts is exempted from taxable income.
(vi) The interest rate for Post Office savings accounts, determined by the Central Government, typically falls between 3% and 4%. Interest is calculated monthly based on balances and credited annually. These accounts maintain a fixed interest rate throughout the year, subject to periodic changes as officially declared.
Required Documentation for Post Office Savings Account
The documents needed for opening a post office savings account comprise:
· Completed application form for the post office savings account.
· Identification proof: Examples include Aadhaar card, passport, driving license, and ration card.
· Address proof: Options encompass passport, PAN card, electricity bill, and ration card.
· Recent passport-size photographs.
Key Attributes of Post Office Savings Account
The primary characteristics associated with a Post Office savings account are as follows:
· The account holder has the flexibility to close the account at their discretion.
· Minors aged 10 and above have the authority to manage their own accounts.
· To ensure account activity, at least one deposit or withdrawal must be made within a 3-year period.
· The account can be initiated solely through cash transactions.
· Interest earnings of up to Rs. 10,000 annually are exempted from taxation.
· Income tax relief is applicable to the interest amount, as per the provisions of section 80L in the Income Tax Act.
· The account can be transferred between various post office branches & Transactions are feasible through ATMs
· Conversion from single to joint accounts, and vice versa, is permitted.
· Deposits and withdrawals can be executed electronically at CBS Post offices.
Logging into Post Office Savings Account e-Banking: Step-by-Step Guide
Here’s how you can access your Post Office e-Banking Savings Account:
· Visit the official India Post e-Banking portal.
· Enter your unique User ID.
· Click on the “Log in” button.
· Upon successful login, your account will be accessible.
· After logging in, you’ll have the ability to perform diverse banking functions, such as checking your balance and initiating fund transfers, through the e-Banking platform.