(Last reviewed in Apr , 2017) 

Various Saving Schemes in India (including Saving Schemes of Post Office)

Public Provident Fund (PPF) A PPF account can be opened at anytime during the year in a Post Office, or  in SBI & its associates or in other selected  nationalized banks. It is safe to invest in the instrument, as it is government-backed.   It can be held by single, joint, minor with parent/guardian and HUF Min Amount : Rs. 500/- per annum, and thereafter in multiples of Rs 5/-

Max Amount :Rs. 1,50,000/- 

For the FY 2017-18, Interest rate is 7.9%.(wef 1/4/2017)


The PPF account matures after 15 years.   Tax benefit: Rebate under section 80C for the amount invested. Interest accrued is Tax-free.    Earlier, rate of interest was fixed for the full tenure of 15 years.  However, wef December, 2011, the rate of interest has been linked to 10 year government bonds and thus rate will vary from year to year)

Nomination is allowed at the time of opening the account or even later on  during the tenor of the account.

Loan facility is also available, but the first loan can be taken in the third financial year from the date of opening of the account, and only  up to 25% of the amount at credit at the end of the first financial year. Rate of interest of loan  has been increased to 2% from earlier 1%.

For the FY 2016-17, Interest rate is 7.9%.(wef 1/4/2017).

Withdrawals are permitted every year from the seventh financial year of the date of opening of the account, of an amount not exceeding 50% of the balance at the end of the 4th proceeding year or the year immediately proceeding the year of the withdrawal, whichever is lower, less the amount of loan if any.

This is one of the most popular schemes of tax savings as the interest received is tax free.


National Savings Certificate (NSC) NSCs can be purchased  through out the year by individuals either in  single, joint, minor with parent/guardian, HUFs. from Post offices.

Scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses.

Tax benefit: Rebate under section 80C.  Interest accrued for any year is taxable but can be treated as fresh investment in NSC for that year and tax benefits can be claimed

Now we have two variants of NSCs - VIII issue and IX issue:


  • These NSCs have a maturity period of 5 years.  (The maturity period has been reduced  from 6 years wef Dec 2011) - The rate of interest will vary as the same has now been benchmarked to 5 year  government securities.
  • For FY 2016-17, it has been fixed at 8.0% for VIII series. 
  • No Tax deduction at source.
  • Certificates can be kept as collateral security to get loan from banks.
  • No maximum limit for investment.  However, Investment only up to INR 1,50,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act.
  • Trust and HUF cannot invest.

Buy National Savings Certificates (NSCs) every month for Five years – Re-invest on maturity and relax - On retirement it will fetch you monthly pension as the NSC matures.


One can avail of a loan against the certificates by pledging it to the bank. The certificate can be encashed from the issuing post office on the due date by simply discharging the certificates at the back. It is safe to invest in this instrument, as it is government-backed.  It is useful for people who invest to save tax.

If encashed prematurely, within a year of issue, then only the face value is given. If encashed after a year but before 3 years, then simple interest on the face value, at the rate applicable from time to time, will be paid. The discount rate (The difference between the accrued interest and the simple interest is the discount rate) will be specified by the government from time to time.


Equity-Linked Saving Schemes (ELSS) Equity linked savings scheme (ELSS) are equity funds floated by mutual funds. This scheme is suited for young people as they have the ability to take on higher risk. The ELSS funds should invest more than 80 per cent of their money in equity and related instruments. It is ideal to invest in them when the markets are down. These funds are now open all the year round. The other way of investing in these funds could be a systematic investment, which essentially means investing a small sum regularly (monthly or quarterly). It is a market-linked security and therefore there will be risks accordingly. The Maximum investment limit is Rs 1,50,000.

Liquidity: Lock-in for three years


 Tax benefit: Rebate under section 80C

Long-term capital gains tax are exempt from tax.


Insurance policies There are a range of life insurance products to choose from, such as term life insurance, whole life insurance, variable life insurance, universal life insurance, and variable universal life insurance. Annuities are tax-deferred investments that guarantee you regular payments at some future time, usually retirement. It is a market-linked security. Interest rate: Depends on returns of the funds  (Returns are in the range of 6 to 7% only)


Liquidity - It is Low.  Most of the time it is locked in till  plan matures.  [However, premature is allowed in some cases but Minimum lock-in of 2 years for participatory policies and 5 years for unit-linked will be applicable for even such cases] 

Tax benefit: Rebate under section 80C

Interest or returns are not taxable


Pension policies Pension plans apart from playing a significant role in retirement planning, also offer tax benefits under a dedicated section i.e. Section 80C. Premiums paid for the same are eligible for deduction. It is a market-linked security. Interest rate - Depends on returns of the funds.  


Infrastructure bonds Infrastructure bonds can be purchased only when the same have been floated by the specified financial institutions.  These Bonds provide tax-saving benefits under Section 80C of the Income Tax Act, 1961, up to an investment of Rs.1,50,000. 

In addition to Section 80C, an investment of Rs.20,000 was  additionally allowed under Section 80CCF earlier.   However, the same has been withdrawn wef FY 2012-13.

Safety: Purely depends on the credit rating of the bank or financial institution issuing the bond

Interest rate usually ranged less than  8%. 

(The facility of additional tax savings upto Rs20000 has been discountined and thus benefit of additional Rs20,000/- available in earlier years is not available from FY 2012-13 onwards.)


Liquidity: Lock-in for three years

Tax benefit: Rebate under section 80C.

However, with low rate of interest and flexibility of investing in any type of instruments since 2005-06, these Bonds are no longer popular.

Kisan Vikas Patra (KVP) - KVP are available in denominations of Rs 1,000, 5000, 10,000 and Rs 50,000. Minimum deposit Rs 1000/- and no maximum limit.  Kisan Vikas Patra was first launched in 1988 by India Post.  However, in view of the perception that it can be misused for investing black money Government of India decided to close this scheme in 2011. However the new Government formed in 2014 decided to relaunch this scheme and the same has been relaunched in 2014..  However these are NOT  eligible for tax saving under Section 80C. Interest Rate is 7.6% from FY 2017-18 onwards (wef 1/4/2017). Amount Invested doubles in 112 months (9 years & 4 months).  Certificate can be purchased by an adult for himself or on behalf of a minor or 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.


Small Saving Schemes of Post Office wef April, 2013



Financial Services Offered by Post Offices:

The Financial service offered by Post office includes Savings and Postal Life Insurance (PLI) / Rural Postal Life Insurance (RPLI). The Post Office small savings scheme provides a secure, risk free and attractive investment option for the small investors and offers the savings products across its 155000 Post offices.

The Post Office savings bank is the oldest and by far the largest banking system in the country, serving the investment need of both urban and rural clientele. These services are offered as an agency service for the Ministry of Finance, Government of India. Several products on offer serve various investment requirements of the customers.

  • Savings Bank account (SB): Serves the need of regular deposits and withdrawals. Cheque facility is also available.
  • Recurring Deposit account (RD): Offers a monthly investment option with a handsome return at the end of five years with option to extend the account period. Insurance cover facility is also available with some conditions.
  • Monthly Income Scheme (MIS): offers a fixed investment option for five years with monthly interest payment facility. The facility of automatic credit of interest to SB account available.
  • Public Provident Fund (PPF): Offers intermittent deposits subject to certain limits for a 15 year period coupled with income tax exemptions subject to certain conditions, on the investment. Loan and withdrawal facilities also available.
  • Time Deposit (TD): Fixed deposit option for periods ranging from one, two, three to five years with facility to draw yearly interest offered at compounded rates. Automatic credit facility of interest to SB account.
  • Senior Citizens Savings Scheme (SCSS): Offers fixed investment option for senior citizens for a period of five years, which can be extended, at a higher rate of interest that are paid in quarterly installments.
  • National savings certificates (NSC) (VIII) issue: with a fixed investment for 5 years on certificates of varied denominations. Pledging facility available for availing loan from Banks.
  • National Savings certificates (IX) issue: Fixed investment tenure of 10 years.

Post Office also offers Insurance product through Postal Life Insurance (PLI) and Rural Postal Life Insurance (RPLI) schemes with low premium and high bonus.

Postal Life Insurance (PLI)
Eligibility: All Government servants and employees of Government aided institutions with certain conditions.

  • Whole Life Assurance (Suraksha)
  • Endowment Assurance (Santhosh)
  • Convertible Whole Life Assurance (Suvidha)
  • Joint Life Insurance (Yugalasuraksha)
  • Anticipated Endowment Assurance (Sumangala)
  • Children’s Policy

Rural Postal Life Insurance (RPLI)
Eligibility: For people residing in rural areas.

  • Whole Life Insurance (Grama Suraksha)
  • Endowment Assurance (Grama Santhosh)
  • Convertible Whole Life (Grama Suvidha)
  • Anticipated Endowment (Grama Sumangala)
  • 10 year Rural PLI (Grama Priya)
  • Children Policy

Besides its own products, Department of Post also provide new pension scheme to the citizens of the country.



Post Office Savings Schemes wef 1st April, 2017


Scheme Interest payable, Rates, Periodicity etc. Investment limits and Denominations Salient features including Tax Rebate
Post Office Savings Account

4.0% per annum on individual/ joint accounts.

Minimum INR 50/-.

Cheque facility available but with higher minimum balance.  Interest earned is Tax Free up to INR 10,000/-  per year from financial  year 2012-13..
5-Year Post Office Recurring Deposit Account

Rate of interest 7.2%. On maturity INR 10/- account fetches INR 726.97. Can be continued for another 5 years on year to year basis.


Minimum INR 10/- per month or any amount in multiples of INR 5/-. No maximum limit.

One withdrawal upto 50% of the balance allowed after one year. Full maturity value allowed on R.D. Accounts restricted to that of INR. 50/- denomination in case of death of depositor subject to fulfillment of certain conditions. 6 & 12 months advance deposits earn rebate.

Post Office Time Deposit Account

Interest payable annually but calculated quarterly.

Period          Rate

1 yr. A/c      6.9%

2 yr. A/c      7.0%

3 yr. A/c      7.20%

5 yr. A/c      7.70%

w.e.f. 01.04.2017 

Minimum INR 200/- and in multiples thereof. No maximum limit.

Account may be opened by individual.   The investment in the case of  5 years TD qualify for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.

Post Office Monthly Income Account Scheme

7.60% per annum   w.e.f. 01.04.2017

In multiples of INR 1500/- Maximum INR 4.5 lakhs in single account and INR 9 lakhs in joint account.

Maturity period is 5 years. Can be prematurely encashed after one year with some conditions.  No Bonus   is admissible on maturity in respect of MIS accounts opened on or after 01.12.2011.

15 year Public Provident Fund Account

7.9% per annum w.e.f. 01.04.2017


Minimum INR. 500/- Maximum INR. 1,50,000/- in a financial year. Deposits can be made in lumpsum or in 12 installments.

Deposits qualify for deduction from income under Sec. 80C of IT Act. Interest is completely tax-free. Withdrawal is permissible every year from 7th financial year. Loan facility available from 3rd Financial year. No attachment under court decree order.

National Savings Certificate (VIII Issue)

Rate of interest 8.0%. Maturity value of a certificate of INR.100/- purchased on or after 1.10.2016 shall be INR after 5 years.


Minimum INR. 100/- No maximum limit available in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-.

A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor. Deposits qualify for tax rebate under Sec. 80C of IT Act.

The interest accruing annually but deemed to be reinvested will also qualify for deduction under Section 80C of IT Act.

Senior Citizen Savings Scheme 8.40% per annum wef 01/04/2017, payable from the date of deposit of 31st March/30th Sept/31st December in the first instance & thereafter, interest shall be payable on 31st March, 30th June, 30th Sept and 31st December.


There shall be only one deposit in the account in multiple of INR.1000/- maximum not exceeding rupees fifteen lakh. account in multiple of INR.1000/- maximum not exceeding rupees fifteen lakh.

Maturity period is 5 years. A depositor may operate more than a account in individual capacity or jointly with spouse.  Age should be 60 years or more, and 55 years or more but less than 60 years who has retired on superannuation or otherwise on the date of opening of account subject to the condition that the account is opened within one month of receipt of retirement benefits. Premature closure is allowed after one year on deduction of 1.5% interest & after 2 years 1% interest. TDS is deducted at source on interest if the interest amount is more than INR 10,000/- p.a.  The investment under this scheme qualify for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.





HOW TO MAKE BEST USE OF SECTION 80C  OR Saving Tax By Investing Under  Section 80C

Latest Income Tax Slabs in India - Income Tax Act 1961  (FY 2016-17  or AS 2017-18)