Post Office schemes - PPF vs KVP vs SSY: Compared! Know latest interest rates, tax rebate and other features

The government schemes have gained popularity among individuals because of their best interest rates and affordability. Not only that, state-owned small saving schemes are offering various tax rebates exactly like the ones given by banks. Some of the schemes are time deposits, senior saving account, national saving recurring deposits, national saving certificates, national saving monthly account and normal savings account. These all are allotted by Post Office. However, there are three schemes of Post Office which are the highest number of returns provider to customers. They are - Public Provident Fund account, Kisan Vikas Patra account and Sukanya Samriddhi account. Interest rates given here range from 7.7% to over 8%. If you are planning to invest in any of these schemes then here’s what latest has happened. 

Public Provident Fund (PPF) Account:

Here you can earn 8% interest rates which are compounded annually. You can invest with minimum Rs 500 and maximum up to Rs 1.5 lakh in a financial year. Deposits can be made in lump-sum or in 12 installments. However, you have to open this account with Rs 100 but has to deposit minimum Rs 500. 

Know tax rebates and features:

• Joint account cannot be opened.
• Account can be opened by cash / Cheque and In case of Cheque, the date of realization of Cheque in Govt. account shall be date of opening of account.
• Nomination facility is available at the time of opening and also after opening of account. Account can be transferred from one post office to another.
• The subscriber can open another account in the name of minors but subject to maximum investment limit by adding balance in all accounts.
• Maturity period is 15 years but the same can be extended within one year of maturity for further 5 years and so on.
• Maturity value can be retained without extension and without further deposits also.
• Premature closure is not allowed before 15 years.
• 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 from the year of opening account.
• Loan facility available from 3rd financial year.

Kisan Vikas Patra (KVP):

An individual can earn up to 7.7% interest rates over here. Just like PPF, interest earned are compounded annually. A minimum Rs 1000 is needed to begin the investment, however, there are no maximum limit. Amount invested is expected to double in 112 months. 

Some of the features are:

• 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 en cash after 2 & 1/2 years from the date of issue.

Sukanya Samriddhi Yojana (SSY) scheme:

This one is specifically meant for parents who are planning to invest in their daughters future. Here’s a person earns a whopping 8.5% interest rates epr annum. Interest is calculated on yearly basis. A minimum Rs 1,000 is required to begin the investment, with upto Rs 1.5 lakh in a financial year. Deposits can be made in lump-sum and they are no limit on the number of deposits. 

Features and tax rebate:

• A legal Guardian/Natural Guardian can open account in the name of Girl Child.
• A guardian can open only one account in the name of one girl child and maximum two accounts in the name of two different Girl children.
• Account can be opened up to age of 10 years only from the date of birth. For initial operations of Scheme, one year grace has been given. With the grace, Girl child who is born between 2.12.2003 &1.12.2004 can open account up to1.12.2015.
• If minimum Rs 1000/- is not deposited in a financial year, account will become discontinued and can be revived with a penalty of Rs 50/- per year with minimum amount required for deposit for that year.
• Partial withdrawal, maximum up to 50% of balance standing at the end of the preceding financial year can be taken after Account holder’s attaining age of 18 years.
• Account can be closed after the completion of 21 years.
• Normal Premature closure will be allowed after completion of 18 years /provided that girl is married.