Post Office Savings Account

What is Post Office Savings Account?

The Post Office Savings Account works just like a bank savings account, except it is run by India Post and backed by the Government of India. You can open one at any post office branch across the country, including in small towns and villages where banks may not be present.

The interest rate is lower than most other NSS schemes, but money is completely liquid — you can deposit or withdraw any time. It also comes with a free cheque book and ATM card at most post offices.

Who Should Invest?

• Anyone who wants a simple, safe place to park money with full liquidity
• People in rural or semi-urban areas without easy access to bank branches
• Senior citizens looking for a simple account alongside their SCSS

Key Features

• Open with just ₹500. No maximum limit.
• Interest up to ₹10,000 per year is exempt from income tax (Section 80TTA)
• Passbook issued. Cheque book and ATM card available at most branches.
• Can be opened as single or joint account
• Nomination facility available

Eligibility — Who Can Open PO Savings?

• Any resident Indian individual can open an account, singly or jointly with up to 3 adults
• A guardian can open an account on behalf of a minor or a person of unsound mind
• A minor above 10 years of age can open and operate the account in their own name
• NRIs cannot open a new Post Office Savings Account

How to Invest in PO Savings

• Visit any post office with a filled account-opening form and photographs
• Submit KYC documents — PAN card and address proof (Aadhaar, voter ID, etc.)
• Deposit the minimum ₹500 to open the account
• Collect your passbook; ask for a cheque book, ATM card, or e-banking access if you want them
• Add a nominee at the time of opening, or any time after

Premature Withdrawal and Loan Against PO Savings

The Post Office Savings Account is a regular savings account, not a fixed-term product, so there is no lock-in or "premature withdrawal" to think about. You can deposit or withdraw money at the counter, by cheque (if you have a chequebook), or via ATM at post offices that issue cards — any time, without any penalty.

Because it is fully liquid on demand, banks and NBFCs do not accept a Post Office Savings Account as loan collateral the way they do a Time Deposit, NSC, or KVP certificate. If you need to borrow against savings, a Post Office Time Deposit or RD is the appropriate instrument to pledge instead.

Taxation and ITR Reporting

Interest on a Post Office Savings Account gets two layers of tax relief. First, up to ₹3,500 of interest on a single account (₹7,000 on a joint account) is exempt outright under Section 10(15)(i) — available under both the old and new tax regimes. Second, under the old regime, any remaining savings-account interest (from this account plus any bank savings accounts) is eligible for the Section 80TTA deduction, up to a combined ₹10,000 per year (₹50,000 under Section 80TTB if you're a senior citizen, which also covers FD interest).

No TDS is deducted on Post Office Savings Account interest. Interest above the exempt/deductible limits is taxable at your income-tax slab rate and must be declared under "Income from Other Sources" in your ITR.

Watch Out For

• Interest rate (4%) is lower than savings accounts at many private banks
• Limited online banking features compared to commercial banks

PO Savings Example

If you keep an average balance of ₹1,00,000 in your Post Office Savings Account through the year, at 4% p.a. you'd earn about ₹4,000 in interest — comfortably under the ₹3,500 (single) exemption plus the 80TTA room, so most account holders owe no tax on it at all.

How PO Savings Compares

A side-by-side look at PO Savings against PPF, NSC, and the 5-year Post Office Time Deposit — all figures are the currently published, verified rates.

Compare All NSS Schemes

See how PO Savings compares to all other National Savings Schemes in one table.

All NSS Schemes