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Post Office Time Deposit Scheme
The Post Office Time Deposit Scheme is a Fixed Deposit (FD) program with guaranteed returns offered by India Post. This scheme offers various tenure options ranging from 1 to 5 years, with competitive interest rates.
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- Post Office Time Deposit Scheme
What is the Post Office Time Deposit Scheme?
The Post Office Time Deposit Scheme (TD) is a savings account offered by the Indian Post Office. It allows you to invest a lump sum for a fixed tenure (duration) to earn guaranteed returns on your investment.
Features of Post Office Time Deposit
The following are the key features of Post Office Time Deposit:
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Options of Multiple Lock-in Period
You can choose from lock-in periods of 1, 2, 3, or 5 years. You can extend the term by submitting an application to the post office.
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Low Minimum Deposit
Open an account with a minimum deposit of Rs 1000. Additional deposits in multiples of Rs 1000, with no upper limit. Initial deposits by cash or cheque.
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Premature Withdrawal
No withdrawals allowed within the first 6 months. Withdrawals between 6-12 months earn interest at the savings account rate.
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Interest Post Maturity
No interest accrues post-maturity if the amount is not withdrawn. The account can be renewed at the prevailing rate if the post office has core banking.
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Interest Payment
The interest with the principal is going to be paid either in cheque or cash. Any payment higher than Rs 20,000 will be made with a cheque.
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Tax Benefits
5-year deposits qualify for income tax exemptions up to Rs 1.5 lakh under Section 80C.
Note: Tax benefits are subject to change as per the prevailing laws.
Post Office Time Deposit Interest Rates
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Post office FD interest rates are updated quarterly by the Government of India.
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Interest on these deposits is computed every quarter but paid out annually.
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The rates are influenced by government securities (G-secs) yields.
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For 5-year deposits, an additional 0.25% spread over G-sec yields is applied.
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Shorter-term deposits (1-year, 2-year, and 3-year) do not include this additional spread.
The table below shows the interest rates for Time Deposit in Post Office that applies from January 01, 2024, to March 31, 2024:
| Account Term | Interest Rate Applicable |
| 01 year | 6.9% |
| 02 years | 7.0% |
| 03 years | 7.1% |
| 05 years | 7.5% |
Eligibility Criteria for Time Deposit in Post Office
Anyone who is looking forward to opening the account should meet the following criteria:
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Any citizen of India
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Joint account with up to three adults.
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A minor who is 10 years of age and operates it by themselves.
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A parent or guardian can open a Time Deposit account on behalf of a minor.
NOTE:
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Non-resident Indians (NRIs) are not eligible to open Post Office Time Deposit accounts.
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Groups or funds, such as welfare funds, trust funds, regimental funds and institutional account holders also cannot access the post office time deposit scheme.
Documents Required
The following are the important documents that need to be submitted to open the account:
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Filled application form of Post Office Time Deposit Scheme
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Passport size photographs
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Identity Proof: PAN card, Aadhar card or Voter ID
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Address Proof: PAN card, Ration card, Aadhar card, Voter ID or Driving license
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Income Proof: Salary slips of the last three months or statement of the bank account of the recent six months
How to Open the Post Office Time Deposit Account?
An individual can open the post office time deposit account at any of the post offices in the country both offline and online.
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Opening the POTD Account Online
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Visit the official website of India post and sign in to the account using valid credentials.
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Under the section of ‘General Services’, simply click on the option of ‘Service Request’
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To request to open the Post Office Time Deposit Account, click on the tab ‘New Request’.
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Enter all the details correcting while filling the form.
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Make the initial contribution sum and then click on the tab ‘Submit’ for the form to be submitted successfully.
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A confirmation message in regards to the same will be shared on the email id registered.
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Opening the POTD Account Offline
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With all the important details, complete the application form
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While submitting the form attach all the KYC documents and a passport size photograph.
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The individual should visit the post office where a savings account has been maintained.
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Submit the application form by making the initial contribution sum of Rs 1000.
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Post Office Time Deposit vs. Bank Fixed Deposit
| Aspect | Post Office Time Deposit (POTD) | Bank Fixed Deposit (FD) |
| Issuer | Indian Postal Service | Banks |
| Interest Rates | 5.5% - 7.5% (Set by the government) | 5.5% - 8.5% (Set by individual banks, can vary) |
| Interest Payment Frequency | Annually | Monthly/Quarterly/Annually (varies by bank) |
| Lock-in Period | 1/ 2/ 3/ 5 years | 7 days to 10 years (varies by bank) |
| Minimum Investment | Rs. 1000/- (and in multiples thereof) | Varies by bank, generally higher than POTD |
| Tax Benefits | Tax benefit on 5-year term deposits under Section 80C (up to Rs. 1.5 lakh) | Tax benefits on 5-year tax-saver schemes only |
| Premature Withdrawal | Allowed with penalty after 6 months | Allowed with penalty (varies by bank and tenure) |
| Accessibility | Widely accessible through post offices nationwide | Available through branches and online banking |
| Risk | Government-backed, considered safe | Subject to bank’s financial health |
| Liquidity | Less flexible due to lock-in periods | More flexible, with options for premature withdrawal |
| Documentation | Simple documentation (KYC) required | KYC and additional documentation may be required |
| Interest Payouts | Can be credited to the savings account or reinvested | Options for payout directly to account or reinvestment |
Post Office Time Deposit vs. Other Post Office Savings Schemes in 2024
| Scheme | Interest Rate | Min Investment | Max Investment | Eligibility | Tax Implications |
| Post Office Savings Account | 4% p.a. | Rs. 500 | No limit | Individuals, Minors | Interest up to Rs. 10,000 exempt from tax |
| Kisan Vikas Patra Account | 7.5% p.a. | Rs. 1,000 | No limit | Individual | No TDS on interest |
| National Savings Certificates (NSC) | 7.7% p.a. | Rs. 1,000 | No limit | Individual | Tax deduction under Section 80C |
| National Savings Monthly Income Account | 7.4% p.a. payable monthly | Rs. 1,000 | Ind: Rs. 9L; Joint: Rs. 15L | Individual | Interest up to Rs. 10,000 exempt from tax |
| National Savings Recurring Deposit Account | 6.70% p.a. | Rs. 100/month | No limit | Individuals including Minors | Interest up to Rs. 10,000 exempt from tax |
| National Savings Time Deposit Account | 6.9% – 7.5% p.a. | Rs. 1,000 | No limit | Individual | Interest up to Rs. 10,000 exempt from tax |
| Public Provident Fund Account (PPF) | 7.1% p.a. (Compounded annually) | Rs. 500 annually | Rs. 1,50,000 annually | Individual | Tax deduction under Section 80C |
| Senior Citizen Savings Scheme (SCSS) Account | 8.2% p.a. (Compounded annually) | Rs. 1,000 | Rs. 15 lakhs | Age 60+ or 50+ with VRS/superannuation | Tax deduction under Section 80C |
| Sukanya Samriddhi Account (SSA) | 8.2% p.a. (Compounded annually) | Rs. 250 annually | Rs. 1,50,000 annually | Girl child ≤ 10 years | Tax deduction under Section 80C |
FAQs
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What is the minimum amount required to open the Post Office Time Deposit Account?
The minimum amount required to open a Post Office Time Deposit Account is Rs. 1,000. You can deposit additional amounts in multiples of Rs. 100. -
Can I avail any tax benefits in a Post Office Time Deposit Account?
Yes, there is a tax benefit for the 5-year Post Office Time Deposit scheme. It qualifies for tax deduction under Section 80C of the Income Tax Act. -
What is a post office time deposit?
A Post Office Time Deposit (TD) is a savings account offered by India Post. You deposit your money for a fixed tenure (1, 2, 3, or 5 years) and earn interest on it. It is considered a safe investment with a guaranteed return by the government. -
Can I double my money in 5 years in the post office?
No, the interest rates offered on Post Office Time Deposits are unlikely to double your money in 5 years. However, they provide a secure way to grow your savings with some guaranteed returns. -
What is a 5 year post office fixed deposit?
A 5-year Post Office Fixed Deposit (FD) is a type of Post Office Time Deposit with a maturity period of 5 years. It typically offers a higher interest rate compared to shorter tenures and qualifies for tax benefits under Section 80C.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
Past 10 Years' annualised returns as on 01-11-2024
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
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