Personal Finance

Planning to open post office savings account? Here's all you need to know

Updated : December 22, 2020 06:31 PM IST

India Post or Department of Posts, which runs postal services in the country, offers the option of opening a savings account.

The post office currently offers 4 percent interest per annum on individual/joint savings accounts.

India Post or Department of Posts, which runs postal services in the country, offers the option of opening a savings account. The post office currently offers 4 percent interest per annum on individual/joint savings accounts.

Here are key things to know about post office savings account:

Eligibility

A single adult or two adults only (Joint A or Joint B), a guardian on behalf of a minor, a guardian on behalf of a person of unsound mind, a minor above 10 years in his own name can open post office savings account.

Only one account can be opened by an individual as a single account. Only one account can be opened in the name of minor/above 10 years of age (self)/person of unsound mind

Deposit/withdrawal limits

The minimum balance to be maintained in a saving account is Rs 500. If this balance of Rs 500 is not maintained at the end of the financial year, a maintenance fee of Rs 100 is deducted from the account on the last working day of each financial year and after deduction of the account maintenance fee, if the balance in the account becomes nil, the account stands automatically closed.

Also read: Small savings schemes to consider for safe and guaranteed returns

The minimum withdrawal amount is Rs 50, while there is no maximum limit on withdrawal and deposits in the case of post office savings account.

Interest calculation

Interest in post office savings account is calculated on the basis of the minimum balance between the 10th of the month and the end of the month and allowed in whole rupees only. No interest is allowed in a month if the balance between the 10th and the last day of the month falls below Rs 500.

Interest is credited in the account at the end of each financial year at the interest rate prescribed by the ministry of finance.

At the time of closure of the account, interest will be paid up to the preceding month in which the account is closed.

As per Section 80TTA of the Income Tax (I-T) Act, from all savings bank accounts, interest up to Rs 10,000 earned in a financial year is exempted from taxable income.

How to open it?

One can get the application form for a post office savings account by visiting the nearest post offices or from the portal of India Post. The form must be properly filled and submitted at the post office by all applicants.

After filling the application form completely, customers can visit the nearest post office branch and submit the duly filled form along with the necessary KYC documents and passport size photographs.

After the opening of the account, customers can access it online via post office net banking.

Planning to open post office savings account? Here's all you need to know

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