Post Bank of India: Financial Facilities Provided by Post-Office (Download PDF)

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Post Office in India is becoming high tech today. Post office is medium of sending letters & People can avail multiple financial services at Post Offices. Govt. has announced that post office will be converted to bank & it will be known as Post Bank of India. This article will go thru various financial services offered by Post office.

Image of India post - Savings Bank

Image of India Post - Savings Bank

Image of India post - Savings Bank

Financial Services Offered by Post Office

Send Money to Foreign Country

  • Now people can send money to foreign country using post.
  • This outward remittance money will be credited in to bank account of beneficiaries in foreign country.
  • Max. Limit of outward remittance is 5000 USD. Max. 12 outwards remittances are allowed per year. This facility is known as MO Videsh.
  • People can get details about this money remittance service here.

Postal Life Insurance

  • People can purchase postal life insurance using post office.
  • Premium of postal life insurance is very low compare to private insurance companies.
  • Regular postal life insurance provides risk coverage from 20, 000 to 50 Lac.

Mutual Fund Investment

  • Post offices are involved in selling mutual funds.
  • Principal, SBI, UTI, Franklin Templeton & Reliance Mutual are some of them. Post office is providing this service in association w/IDBI bank.
  • For more information about Mutual Fund investment thru post visit post office website.

ATM

  • Some selected post office offers ATM services.
  • People can withdraw cash or carry out money transfer using ATM services.
  • Postal department is issuing separate ATM card to customer for this services. Postal department is planning to extend this facility to every city.

Small Saving Schemes

  • NSC, MIS & Sukanya Samrriddhi Account are most popular small saving investment option offered by post office.

Future Plan

Reverse E-Commerce

  • Indian Post office is working on Reverse E-commerce platform. Using this model people can sell products to other company via postal department.

Payment Bank

  • Indian post office will be converted in to payment bank by 2017, GoI has in principally approved this proposal. This bank will act as payment bank means anyone can deposit money in this bank & they can not avail loan facility.

Common Services

  • Indian Post office is thinking to open common service centre. People will be able to avail services like applying for Aadhar card, birth certificate, mutual funds investment etc.
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Small Saving Schemes That Offer Income Tax Benefits

Savings schemes offered by Department of Posts

  • Post Office Savings Account,

  • 5-Year Post Office Recurring Deposit Account (RD),

  • Post Office Time Deposit Account,

  • Post Office Monthly Income Scheme Account (MIS),

  • Senior Citizen Savings Scheme (SCSS),

  • 15-Year Public Provident Fund Account (PPF),

  • National Savings Certificates (NSC),

  • Kisan Vikas Patra (KVP)

  • Sukanya Samriddhi Accounts for girl child.

Many of these schemes offer advantage of income tax benefits to investors.

Public Provident Fund (PPF)

  • Post offices offer popular tax-saving scheme PPF, which qualifies for EEE (exempt-exempt-exempt) benefits under tax laws. Contribution, interest & maturity proceeds all are tax-free.
  • PPF deposits are eligible for tax deductions under Section 80C of Income Tax Act – max. of Rs. 1.5 lakh can be claimed in one financial year.
  • Maturity period of PPF accounts is 15 years & it can be extended in blocks of 5 years.
  • Loan facility & partial withdrawal facilities are allowed.
  • Premature closure is allowed only after account has completed 5 financial years.
  • Govt. has proposed to allow premature closure of PPF accounts.
  • PPF accounts offer interest rate of 7.6% (January-March quarter).

Sukanya Samriddhi Scheme

  • Sukanya Samriddhi Account is small savings scheme exclusively for girl child.
  • Parent or legal guardian can open account in name of girl child until she attains age of 10 years.
  • Sukanya Samriddhi account can be opened in some designated banks.
  • Annual deposit of up to Rs. 1.5 lakh qualifies for tax benefit under Section 80C. Max. amount that can be deposited in year is Rs. 1.5 lakh.
  • Sukanya Samriddhi Account fetches interest rate of 8.1 per annum (January-March quarter).

5-Year Post Office Time Deposit

  • Post offices offer deposits w/tenure of 1 year, 2 years, 3 years & 5 years, according to India Post.
  • Investment under 5-year term deposit qualifies for benefit of Section 80C of Income Tax Act, 1961 from 1st April, 2007, according to India Post.
  • Under current income tax laws, investment in income tax-saving FDs can help you claim deductions for investments up to Rs. 1.5 lakh year under Section 80C of Income Tax Act.
  • 5-year Post Office Term Deposit offers interest rate of 7.4 %.

Senior Citizen Savings Scheme (Scss)

  • Senior Citizen Savings Scheme is investment option for individuals above age of 60 years.
  • Individual aged 55 years or more up to 60 years who has retired on superannuation or under VRS can invest in Senior Citizen Savings Scheme.
  • It offers interest rate of 8.3%.
  • Maturity period if 5 years & individual cannot invest more than Rs. 15 lakh under this scheme. Investment under this scheme qualifies for benefit of Section 80C of Income Tax Act but interest earned is taxable.
  • TDS is deducted at source on interest if interest amount is more than Rs. 10, 000.

National Savings Certificates (NSC)

  • 5-Year National Savings Certificate offers interest rate of 7.6%.
  • Interest is compounded annually but is payable at maturity. This means every Rs. 100 invested in NSC grows to Rs. 144.23 after 5 years.
  • It has maturity period of 5 years.
  • Investment of up to Rs. 1.5 lakh in NSC can qualify for income tax deduction under Section 80C of Income Tax Act.

Post Office Savings Account

  • Savings account facility offered by Post Office give interest of 4 % per annum. Under Section 80TTA, interest income earned from savings accounts up to Rs. 10, 000 is tax deductible from gross income.
  • Senior citizens will get higher interest income exemption limit on deposits in banks & post offices, including recurring deposits, from 1st April.
  • Deduction up to Rs. 10, 000 is allowed under Section 80TTA of Income Tax Act to individual in respect of interest income from savings account.
  • Under tax laws, new section, Section 80TTB, is proposed to be inserted to allow deduction up to Rs. 50, 000 in respect of interest income from deposits held by senior citizens.
  • Under Section 80TTA, corresponding deduction of such interest income up to Rs. 10, 000 is allowed & hence it does not form part of income to this extent.

- Published/Last Modified on: August 30, 2018

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