Post Office Savings Account - Requirements, Process,Tax Benefit etc
Updated on: 16 Jan, 2020 05:56 PM
Post Office Savings Account – Requirements, Process,Tax Benefit Etc
Post office savings bank account is a great initiative by the Government of India for small savings and is quite similar to the saving accounts found in banks. It is widely popular in rural and semi-rural areas where the bank approach is limited. It is the safest place to deposit your liquid cash while earning a fixed return on it. Additionally, the deposits can be liquidated anytime as per your need. Your deposits could be tax-free as well depending upon the interest earned and as per the Income tax act. For availing all the benefits, it is essential that you have a savings account in any of the post offices across India. The current (the year 2019) savings account interest rate on deposits is 4% per annum which is similar to the rate offered in banks.
You can open a savings account in any post office across India. However, if you want an online facility related to your post office savings account, then you will have to look for a post office with ‘Core banking solution’ facility. You can avail online transaction facility among the post offices via this facility.
What is the eligibility criteria to open a Post Office Saving Bank Account?
To open a Post Office Saving Bank Account some criteria as mentioned below shall be met-
Any person who is 10 years and old can open a savings bank account with a post office.
He/she should be an Indian Resident.
In case of a minor, the guardian can open the savings account on behalf of the minor.
Two or three people can collectively open a joint account.
A person with an unsound mind can also open a savings account.
A person is entitled to only one single account and one joint account at a particular post office.
What are the documents required for opening a savings account at a post office?
For opening a savings account at a post office, you need to have a list of documents mentioned below:
Two recent passport size photographs. If it is a joint account, passport size photographs of all the account holders will be required.
ID proof: any of the following identity cards –
or any other photo ID card issued by any recognized board, institution or the state government.
Address proof: any of the following documents would suffice the documentary proof for the address of an applicant –
Bank Statement/ Passbook.
Telephone bill but it should not be more than 3 months old etc.
The process to open a Post office savings account:
To open a savings account, you need to collect all the documents mentioned above. Fill in the form carefully and provide the nominee details. You can fill up the nominee details later also after opening your savings account. It is advisable that you carry your original documents for the verification process. For your savings account, you will need a witness and witnesses’ signature to complete the formalities.
Go to the nearest or your preferred post office to open a savings account. You can open a savings account in any post office across India and can transfer your account from one branch to another any time.
Fill in the form which can either be acquired online or offline from any post office. Make sure you are getting the right form since there is a separate form for senior citizens.
Submit the form along with all the documents mentioned above.
Post submitting the form, pay the cash that needs to be deposited in the savings account. The minimum amount required is Rs. 20. There is an upper limit also but it differs according to the account type. For a single account, the maximum limit is Rs. 1,00,000 (one lakh) and for joint accounts, the upper limit is Rs. 2,00,000 (two lakhs).
Your account will be opened after the completion of the payment. To keep your account active, it is important that you are making at least one transaction in three years.
The interest earned on the savings account is regulated by the Government. The current rate of interest offered on the single and joint accounts is 4% per annum. Interest earned is exempted from the taxes if it is below or up to Rs. 10,000 (Section 80TTA of the Income Tax Act 1961). For senior citizens the exempted limit is Rs. 50,000 (Section 80TTB of the Income Tax Act 1961).
In addition to this interest on post office savings account to the extent of
Rs 3,500 for single account holders
Rs 7,000 for joint account holders
Is exempt under section 10(15)(i) of the income tax act 1961.
Which means an aggregate of Rs 17,000 interest amount can be claimed as an income tax deduction for non senior citizens and Rs 57,000 for senior citizens.
Let us take an example to understand the deduction in detail
Taxpayers aged below 60 years
Taxpayers aged 60 & above
Interest from Savings account with Bank(s)
Interest from Savings account with Post Office(s)
Total Taxable Income
Less: Exemption u/s 10(15)(i) for interest earned on post office savings account
Gross Taxable Income
Less: Deduction under section 80TTA : 80TTB
Net taxable income
You can withdraw or shut the account whenever you want since there is no lock-in or maturity period.
Attributes of a Post Office Savings Account:
An account can be opened by cash only.
You can avail the chequebook facility either at the time of opening the savings account or afterwards.
Facility of transferring savings account from one post office to another is also available to individuals.
A guardian can apply for a savings account on behalf of a minor. After attaining majority, the then minor needs to apply for transferring the account on his/her name.
A joint account can be converted into a single account and vice versa.
You can do all the transactions online for saving account if your post office has an online transaction facility.
You can even get an ATM/debit card if you have a sufficient amount in your savings account on the day of card issue of CBS post offices.
Partial/complete withdrawals can be made anytime according to the needs. However, a minimum amount of Rs.50 needs to be left in a non-cheque facility and Rs.500 in a cheque facility
Is a cheque book facility available at the post office saving account?
Cheque book facility is available at the post offices. You can apply for a cheque book while opening the account after making an initial deposit of Rs. 500. You can apply for cheque book facility after opening the account but you need to have at least Rs. 500 in your savings account to avail this facility. For cheque book facility, the minimum amount required in the account is Rs. 500 and it is Rs. 50 for accounts without cheque book facility.
How to apply for Department of Posts – Internet Banking account?
Anyone with valid and active savings account at the post office can apply for India posts internet banking. For activating the facility, you will need to submit your KYC details and would require a PAN card, Department of Posts (DoP) ATM/debit card, and valid email address. Follow the steps mentioned below to access the internet banking portal of the India Posts.
What is the Registration Process for Post Office Saving Account?
Fill the form and submit it along with copies of Id proof and address proof. After you have put in the request and submitted the required documents, it will take a day to activate your internet banking portal and you will be alerted via SMS on your mobile number
What are the steps for Activating the Post Office Saving Account?
Click on 'New User Activation', fill in all the necessary details and configure your Internet Banking login id, password and transaction password
Login with your id and password and set security questions and put in the answers
After you have successfully passed these two steps, your account will be activated and you can log in anytime you want from that point onwards
List down the benefits of Online Post office saving accounts facility.
Online Post office saving accounts facility comes with several benefits, a list of which is mentioned below:
You can access your account summary.
Check all the details related to your savings account.
You can transfer funds from one savings account to another.
You can withdraw your Public Provident Fund (PPF).
Request for services from your account can also be made.
You can check details of your other savings account like RD, PPF, NSCerm Deposits, and TDS details.
Frequently Asked Questions (FAQs)
Q - Can we open the Post Office Savings account online?
Opening savings account at the post office is not yet available online to the customers. However, at some post offices, you can access the online/e-banking facility after opening the savings account.
Q - How to know your customer Id for the Post Office Savings account?
Customer Id is always printed on the first page of your passbook under 'CIF Id'.
Q - What happens if you enter your login password and transaction password wrong all five times?
If you enter your login password and transaction password wrong all 5 times, then your user Id and transaction rights will be disabled.
Q - What steps can be taken in case you forgot your passwords and answers to your security questions?
If you forget your passwords and answers, then you will have to drop an email to ‘[email protected]’ from your registered email address addressing the issue and also mention your User Id/ CIF Id.
Q - How can I get support if I am facing problems with e-banking operations of Post Office Savings account?
You can get support from the Department of Posts. You can either drop them an email at ‘[email protected]’ or you can call on 1800-425-2440 between 9 AM to 6 PM.
Q - When is post office account considered as ‘silent account’?
If an account is not used for a period of three years, it will be considered as a silent account. You can re-activate your account by making a transaction but till the re-activation of the account, Rs. 20 will be charged at the end of every year.
Q - Is there any girl specific post office saving scheme in India?
Yes, the government of India launched a girl specific post office saving scheme in 2015. The scheme is popular by ‘Sukanya Samriddhi Account’. The major objective of the scheme is to serve the education and marital needs of a girl child.
Q - How can I transfer a savings account from one post office to another?
To transfer your savings account from one post office to another, visit the post office and apply for account transfer with Form SB 10(b). This form is also available online on the India Post website. You can either submit the form at the original post office or at the new post office.
Q - What happens to the Post Office Saving Account if the depositor dies?
In Case, it’s a joint account, then the other account holder becomes the sole owner. If it’s a single account, the responsibility and amount will go to the nominee. Further, if there is no nominee, then the amount will go to the heir/ person entitled to receive the money legally.
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Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.