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Post Office Saving Schemes - PORD

While we near the end of the year, I mean Financial Year, we all busy looking out for tax saving investments. My suggestion is that - Do not save for tax, but save and take tax benefits.

I would like to discuss the following saving avenues, which are secured and give good tax benefits too. Taken this from the Small savings website. So, better check with your consultant before investing.



(a) Post Office Recurring Deposit Scheme (PORD)

(b) Public Provident Fund (PPF)
(c) Post Office Monthly Income Scheme (POMIS)

(a) Post Office Recurring Deposit Scheme (PORD)
Maturity Period.....: 5 years
Minimum..............: Rs.10 (Deposits can be in multiples of Rs.5.)
Maximum..............: No limit
Place of Deposit.......: All Post Offices

For example of Rs. 10 every month for 5 years will fetch interest of Rs.128.90 with Principle of Rs.600/-.

After 5 years the account can be continued for another 5 years at the same rate of interest.

Opening of Account

  • The account can be opened by a single adult of two adults jointly or a minor who has attained the age of 10 years or a guardian on behalf of a minor.


  • Deposits may be made a minimum of Rs.10/- once in a calendar month, in multiples of Rs.5/-. Amount of deposit made at the time of opening the account shall not be changed.


  • A depositor may have more than one account in his own name or jointly with others.


  • There is no ceiling on deposit.


  • Monthly installments can be paid in advance and in that case, a suitable rebate is allowed

Loan Facility

  • Loan up to half of the deposit may be taken after one year and before maturity.


  • This must be repaid together with interest in one or more installments.


  • Loan not repaid is deducted together with interest from the amount payable at the time of closure of the account.

Insurance Benefit

In case of death of a depositor, his legal heir or nominee becomes entitled to get immediately the full maturity value of the account/accounts subject to the maximum account value of Rs.50 /-

  • the account is not a discontinued one
  • 24 months have elapsed from the dates of opening the account, and

  • the age of the depositor at the time of opening of the account was between 18 and 53 years.

  • there should not be withdrawal during the first 24 months.
A recurring deposit will allow you to save little money every month. You can plan RD for a foreign trip or a Capital item!

In the next post, let us see the POMIS.

Cheers,
Gopal

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