Post office savings accounts offer a reliable avenue for safeguarding your funds while also providing the opportunity to earn interest without the burden of hefty fees or minimum balance prerequisites. Nonetheless, an account slips into dormancy if it remains inactive for a specified duration.
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Understanding Dormant Accounts in the Post Office
An account in the post office is classified as dormant if there’s been no deposit or withdrawal activity for three consecutive financial years.
How to Resuscitate a Dormant Account
To breathe life back into a dormant account, simply submit an application along with updated KYC documents and your passbook at the relevant post office.
Crucial Features of Post Office Savings Accounts
Opening balance requirement: Rs 500/-
Interest Rate : As of November 30, 2023, the interest rate stands at 4.0% per annum for individual/joint accounts.
Eligibility to Open a Post Office Savings Account
A single adult
Two adults (Joint A or Joint B)
A guardian on behalf of a minor
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A guardian for a person of unsound mind
A minor aged above 10 years in their own name
Deposits and Withdrawals Guidelines
All transactions are conducted in whole rupees.
Minimum deposit: Rs. 500 (subsequent deposits not less than Rs. 10)
Minimum withdrawal: Rs. 50
There’s no maximum limit on deposits.
Withdrawals that would reduce the balance below Rs. 500 are not permitted.
If the account balance doesn’t reach Rs. 500 by the end of the financial year, a maintenance fee of Rs. 50 will be deducted. If the balance becomes zero, the account will be automatically closed.
Interest Regulations
Interest is calculated based on the minimum balance between the 10th of the month and the month’s end, rounded to the nearest rupee.
No interest is accrued if the balance falls below Rs. 500 between the 10th and the last day of the month.
Interest is credited annually at the prescribed rate by the Ministry of Finance.
Upon account closure, interest is paid up to the preceding month.
Tax Implications
As per section 80TTA of the Income Tax Act, interest earned up to Rs. 10,000 in a financial year from all Savings Bank Accounts is exempted from taxable income.
