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Post Office Savings Account – Requirements, Process,Tax Benefit Etc

Updated on: 11 Jun, 2024 02:57 PM

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.

Post Office Savings account

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.

Benefits of Post Office Savings Account

Post Office Savings Accounts offer several attractive benefits, including cheque and ATM facilities, making them a versatile choice for many customers. Below are some key features:

  1. Cheque Facility: Customers can request a cheque book for their savings account, even for existing accounts.
  2. ATM/Debit Card: Account holders who maintain the required minimum balance can receive an ATM/Debit card from CBS Post Offices.
  3. Minor Accounts:
    • Under 10 Years: Minors under 10 can have accounts managed by a parent or guardian.
    • 10 Years and Older: Minors aged 10 or above can independently manage their accounts.
  4. Portability: You can transfer your Post Office Savings Account to any branch of your choice. This is helpful if you relocate, are dissatisfied with the current branch, or for any other reason. Note that you can only have one account per post office.
  5. Nomination: At account opening, you can designate a beneficiary. This person will receive the account's funds if the account holder passes away. The nomination can be updated at any time.
  6. Joint Holdings: Accounts can be jointly held by two or three adults. You can convert a single account to a joint account, or vice versa.
  7. Tax Exemptions: Interest earned up to a certain limit is exempt from tax. Joint account holders also enjoy these tax benefits.
  8. Electronic Facilities: Customers can perform transactions like deposits and withdrawals electronically at any CBS Post Office.
  9. Long Period for Inactivity: To keep your account active, you only need to make one deposit or withdrawal every three fiscal years. The account will not be deemed dormant until three fiscal years have passed without any transactions.

These features make Post Office Savings Accounts a reliable and flexible option for managing your savings.

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 (below the age of 10 years).
  • Two or three people can collectively open a joint account.
  • A person with an unsound mind can also open a savings account.

Bank Fixed Deposits do not permit group accounts, institutional accounts, or other types like official capacity and security deposit accounts.

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:

Account opening form which can either be acquired from the nearest post office or can be downloaded from this link:

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 –

  • Passport
  • Driving license
  • Aadhaar card
  • Voter Id
  • Ration card

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 –

  • Passport
  • Ration card
  • Aadhaar card
  • Electricity bill
  • 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

Post Office Saving Schemes are perfect for individuals who prefer low-risk investments. These schemes offer stable returns that aren't affected by market fluctuations, making them a great option for those who want to safely grow their savings. Here's how you can open an account through different methods:

Via Internet Banking

  • Access the DOP Website: Go to the Department of Posts (DOP) Internet Banking website.
  • Activate New User: Click on 'New User Activation.'
  • Enter Details: Provide your 'Customer ID' and 'Account ID,' then click 'Continue.' Alternatively, visit your local post office branch to activate Internet banking by filling out a form and submitting required documents.
  • Login: After activation, log in with your user ID and password.
  • Navigate to Services: Select the 'General Service' tab and then 'Service Request.'
  • Start New Request: Under 'Service Request,' choose 'New Requests.'
  • Select Account Type: Pick the type of account you wish to open from the available options.
  • Submit Application: Fill out the application form and click 'Submit.'

Via Mobile App

  • Download the App: Get the ‘India Post Mobile Banking’ app from the Google Play Store and log in.
  • Initiate Request: On the home screen, go to the ‘Requests’ tab to start opening a savings account.
  • Complete Details: Provide the required information such as deposit amount, tenure, source account, nominee details, etc., and submit.

By Downloading the Application Form

  • Get the Form: Download and print the application form from the official post office website.
  • Prepare Documents: Attach all necessary documents.
  • Submit In-Person: Visit your home post office branch and submit the form and documents to the relevant staff.
  • Make a Payment: Pay the minimum deposit required to open the account.
  • Account Verification: The post office will verify your application, open your account, and issue a passbook.

Tax Benefits of Post Office Savings Account

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 for individuals upto 60 years of age (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 -

Particulars Taxpayers aged below 60 years Taxpayers aged 60 & above
Interest from Savings account with Bank(s) 45,000 45,000
Interest from Savings account with Post Office(s) 11,000 11,000
Total Taxable Income 56,000 56,000
Less: Exemption u/s 10(15)(i) for interest earned on post office savings account (3500) (3500)
Gross Taxable Income 52,500 52,500
Less: Deduction under section 80TTA : 80TTB (10,000) (50,000)
Net taxable income 42,500 2,500

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?

To activate the internet banking facility online, you will have to visit the post office where you have your savings account. You will have to fill a form which can either be taken from the India Post website or from any post office.

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?

  • Go to the online portal of personal banking by clicking on the link mentioned below:
  • 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

Now that you know everything about post office savings account, its interest rate, eligibility, how to open it, you can decide whether to invest in post office savings account or not. Apart from post office savings scheme, there are various other investment options that can help you maximize your tax savings.

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Frequently Asked Questions

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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CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of 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.