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Account opening rules

A single adult, up to a limit of three individuals in joint names, a minor above the age of ten, a guardian on behalf of a minor, or a person of unsound mind can establish the account by submitting the account opening form at any post office. Under this scheme, an individual can establish and run one or more accounts as a single account or a joint account, subject to the maximum contribution ceiling. The account holder’s contribution of the amount of a joint account shall be treated as one half or one-third of the deposit, as if the account were maintained by two adults or three adults, for the purpose of maximum deposits stated below.

Deposit rules

The POMIS can be established with a minimum deposit of one thousand rupees or an amount in multiples of one thousand rupees, and each account can only have one deposit. A total of four lakh fifty thousand rupees can be contributed in a single account, and nine lakh rupees can be placed in a joint account by the account holders. This indicates that an individual’s total deposits in all accounts should not surpass Rs 4.5 lakhs in a single account and Rs 9 lakhs in a joint account, respectively.

Interest on deposit rules

The current interest rate on the deposit made under this scheme is 6.6 per cent per year, payable on a monthly basis. On the completion of a month from the date of account opening, interest will be paid to the account holder. In case the account holder does not claim the monthly interest, the interest will not accrue any more interest. If an account holder deposits in his or her account above the upper limit discussed above, the responsible post office will return the surplus deposit to the account holder.

The surplus deposit shall earn interest at the rate prevailing to the Post Office Savings Account at the time of contribution and shall be payable to the depositor on such surplus amount. The interest is payable from the time the surplus amount is deposited until the end of the month before the month in which the contribution is refunded to the account holder. The taxable interest amount shall be credited into a savings account established at the same post office or into an ECS account of the account holder.

Premature withdrawal rules

The account holder will be allowed to withdraw the balance and close the account at any time after a year has passed since the account was opened by submitting an application form and passbook to the relevant post office. An amount equal to 2% of the deposit will be deducted if the account is closed after the account holder before 3 years of the account opening date. If the account is closed after 3 years but before 5 years from the date of inception, a 1% penalty from the principal amount will be deducted, and the remaining balance shall be credited to the account holder.

Account maturity rules

The concerned post office will provide you with the deposit made at the time of account opening, as well as interest earned, once five years have passed since the account was opened. The account can be permanently terminated after 5 years by submitting a required application form with a passbook to the concerned Post Office, and the maturity amount can be withdrawn respectively by the account holder.

If the account holder passes away before the maturity date, the account can be closed by the responsible nominee/legal heirs and the maturity proceeds can be claimed by them. The account user should keep in mind that the deposit amount, plus interest, can be withdrawn up to the month preceding the month in which the refund is issued.

It has been four years since GST was introduced in the real estate sector; the Government’s move provided relief from multiple taxes. Another relief was when GST on affordable housing was brought down from 8 per cent to 1 per cent and from 12% to 5 per cent for other construction properties that do not fall in the definition of affordable housing. The new rates, however, meant that developers could no longer enjoy input tax credit. On the fourth anniversary of GST, realtors feel that the Government should think of some temporary waiver in GST to boost the market, especially the under-construction segment.

The bone of contention has been the GST on under-construction homes as there is no GST on ready-to-move-in homes and input tax credit (ITC). Under-construction homes attract 5% GST for premium (mid-range) properties. This does not, however, include ITC benefits, which would have decreased the total purchase cost. Over and above, 5-7% stamp duty and registration charges apply to both under-construction and ready-to-move homes, but the cumulative extra cost on under-construction homes effectively negates most of the price advantage they used to offer.

“Not surprisingly, most demand today is in ready-to-move properties which do not attract any GST. Developers, on the other hand, require working capital to execute ongoing projects. Due to a lack of buyer interest in under-construction homes, developers would be unable to access one of the formerly “conventional” funding options: interest-free capital raised directly from the market,” according to Ashok Gupta, CMD, Ajnara India Ltd. This dynamic feeds the vicious cycle: buyers are hesitant to invest in under-construction homes, projects are delayed due to a lack of funding, and building progress is poor or non-existent, further dampening buyer confidence.

What needs to be done?

The situation is tricky for almost 19 lakh units across the top 7 cities; these include stalled, delayed, and ongoing under-construction units. MMR and NCR together comprise a whopping 60% share of the total under-construction units across the top 7 cities. It has been noticed in previous years also that buyer always grab the opportunities that help them save some extra money. “The reduction in GST rates is anticipated to activate that thinking, assisting the market in overcoming its current difficulties. The impact will be felt in non-metro markets where discretionary income is low, and homeowners in these areas will be able to invest in newer homes thanks to the rate drop,” says Harvinder Singh Sikka, MD, Sikka Group.

Realtors are calling for a temporary GST waiver. “This, coupled with existing offers and discounts by developers, can make the home purchase a more attractive proposition. At present, the GST rate for premium residential properties is 5% of the total property cost, excluding input tax credit (ITC). For affordable homes (

The builders see a drop in profits that might be transferred to the buyers leading to an increase in property prices and defeating the purpose of providing ‘Housing for All’. “The Government will have to pay attention to the Input Tax Credit as well; otherwise, it will be a direct hit on Affordable Housing as the house becomes even more expensive and will be away from common man’s reach. Apart from this, Government should reduce the GST to a single digit on building material like steel, cement etc, as well as contractor service, among others,” says Dhiraj Bora, Head Marketing & Communication, Paramount Group.