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Home Articles Post Office Fixed Deposits: FD Features, Rates And Benefits

Post Office Fixed Deposits: FD Features, Rates And Benefits

IndianMoney.com Research Team | Updated On Saturday, January 19,2019, 11:54 AM

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Post Office Fixed Deposits: FD Features, Rates And Benefits

 

 

Introduction on Post Office Fixed Deposits:

Post office fixed deposit is an investment plan that can be availed under the post office savings scheme. This scheme is also known as post office time deposit. This scheme enables people to deposit money for a specific time period and earn interest. The minimum amount required to open a POTD account is Rs 200 and there is no upper limit.  The tenure of this term deposit is 1 year, 2 years, 3 years and 5 years. The Post Office FD offers interest rate ranging from 6.90% a year to 7.80% a year for 2019.

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SEE ALSO: Difference Between Recurring And Fixed Deposit

Post Office Fixed Deposits: FD Features, Rates And Benefits

How to invest in Post Office Fixed Deposits?

The post office fixed deposit is a good option for people who do not want to deposit money in bank fixed deposit or company fixed deposits. The post office time deposit serves as an alternative for people as these offer a better interest rate than bank fixed deposits. This scheme is offered by the Indian postal service and is a secured deposit where the maturity amount is not affected by market risks. However, the money deposited is fixed for a specific amount of time and can be withdrawn on maturity.

The post office fixed deposit has been a popular investment option in rural areas as compared to bank fixed deposits. The investor has the option of choosing the time period of these deposits. The tenure generally ranges from 1 year to 5 years. The rates of interest on post office fixed deposit depend on the time period chosen and the rates tend to get higher as maturity rises.

This investment option is best suited for people with low risk profile and those who want safe investments. The POTD schemes offer attractive interest rates that are between bank FD rates and company FD rates.

SEE ALSO: What are Fixed Deposit Accounts?

Features Post Office Fixed Deposit:

Listed below are the features and benefits of post office fixed deposits:

  • Any person can open a post office fixed deposit. The minimum deposit is Rs 200 and there is no upper limit. So people with low income can also avail this scheme and deposit money in post office time deposit.
  • The post office fixed deposit offers the option of adding a nominee.
  • The account can be opened either by depositing cash or by submitting a cheque. In case of cheques, the date of realization of the cheque is considered as the date of opening the account.
  •  You can open a number of fixed deposit accounts at the same time.
  • The post office fixed deposit accounts can be transferred from one post office to another.
  • The post office fixed deposit allows the depositor to choose the maturity period ranging from 1 -5 years. FDs with tenure of 5 years are eligible for tax benefits as per Section 80C of the Income Tax Act, 1961.
  • The post office fixed deposit offers good rates of interest, sometimes higher than a bank fixed deposit.
  • On maturity, the depositor can renew the account for the same tenure. Premature withdrawal on deposits is allowed, however the depositor must follow the terms and conditions on premature withdrawal laid by the post office.
  • A post office time deposit can be opened in single or joint name. It also has the facility of converting the deposit from single to joint account and vice versa at any point in time.
  • A non resident Indian cannot avail the benefit of opening an account at the post office.
  • The interest on the deposit is liable for tax deduction at source.
  • Minors aged 10 years or more can open and manage these accounts as well.

SEE ALSO: Best Investment Plan For 3 years

Eligibility Criteria of Post Office Fixed Deposit:

The eligibility criteria of post office time deposit are as follows:

  • All Indian citizens who are above 18 years of age are eligible to open a POTD account.
  • NRI’s cannot deposit money in India Post Time Deposit schemes.
  • Minors aged 10 years or more can open a Post office Term Deposit account, but they must get it transferred in their name when they attain 18 years of age.

Tax benefit for senior citizens:

Post office time deposit also offers tax benefits for senior citizens. An amount of up to Rs 50,000 is exempt under Section 80TTB of the income tax act.

Interest Rates in Post Office Fixed Deposit:

The following table illustrates the rates of interest on post office time deposit schemes:

Time period

Interest rate

1 year

6.9%

2 year

7.0%

3 year

7.2%

5 years

7.8%

Post Office Fixed Deposit Interest Rates 2019:

The rates of interest on post office time deposit are revised by the Government each financial year. The rates are calculated based on the yields on government securities. Presently the Post Office FD rates start from 6.90% to 7.80% per year.

Rates for Post Office 5-year Time Deposit:

The rate of interest offered by post office time deposit with five year tenure is 7.80% a year. Tax Saver FDs with tenure of 5 years are eligible for tax benefits as per Section 80C of the Income Tax Act, 1961.

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