Post Office Time Deposit Scheme

With no maximum restriction on the investment amount and high interest rates, the Post Office Time Deposit (TD) is a lucrative investment option. The eligibility requirements are simple, and you only need to submit minimal documents to park your funds in the Post Office TD scheme.

Backed by the government of India, the Post Office Time Deposit Account is among the safest investment avenues that assure high returns with flexibility. Read on to learn more about this scheme, the Post Office Term Deposit rules, and its features and benefits. 

At the start of every quarter of a fiscal year, the Indian Finance Ministry reviews the Post Office Term Deposit interest rate. The yield on government securities is used to determine the postal term deposit interest rates, which typically have a spread over the return in the public sector.

The interest rates for a Post Office Time Deposit account for 01/07/2023 to 30/09/2023 are as follows:

Disclaimer: These rates are subject to change as per the policy rates set by the concerned bodies.

You can check the previous Post Office Term Deposit rates on the official website. Remember that the interest rate is revised every quarter, and the interest payout gets disbursed annually.

You can invest in the Post Office Term Deposit scheme through 4 different accounts. The categorisation is linked to the tenor you choose. Here, you can choose an account with a tenor of 1, 2, 3, or 5 years. 

You can renew/extend your deposit within the prescribed period, and it is important to note that the longer tenor option, 5 years, has the highest rate. Additionally, from the 4 options, only the 5-year Post Office Term Deposit scheme offers you a tax benefit. 

This is applicable under section 80C of the IT Act, 1961. 

One of the major advantages of opening a Post Office Time Deposit account is that you enjoy tax benefits. Under Section 80C of the Income Tax Act, 5-Year Time Deposits are eligible for a tax deduction. 

Aside from this, you get to assign nominees for your investments. In fact, this provision is easy to opt for and makes it easy to invest in your loved ones. Additionally, the Post Office Time Deposit Scheme offers assured returns. This means that your money is secure, all through the tenor.  

With respect to earnings, the interest is calculated quarterly and paid annually. You can transfer the interest earnings to a savings account by submitting the appropriate forms. 

Best of all, you can make a premature withdrawal if needed. However, this is only possible once you complete 6 months from the date of investing. The TD post office scheme also allows you to invest freely. There is no maximum investment limit, and the investments can be made with as little as ₹1,000 and in multiples of ₹100. 

You can also open as many accounts as you wish and invest based on your goals. Lastly, since the principal invested and the interest received is covered by a sovereign guarantee, POTD is believed to be safer than FDs. 

In a post office time deposit, you can withdraw money even before the tenor ends. The sole prerequisite for a premature withdrawal is that you can withdraw only after 6 months from the date of the deposit. 

Here are other important terms and conditions for premature withdrawal from a Post Office Time Deposit: 

• If the premature withdrawal happens after 6 months but before 1 year from the date of the account opening, the interest rate applicable would be as of a PO savings account 

For premature withdrawals after 1 year, the applicable interest rate is 2% less than the interest rate corresponding to the term for which you invested.

There are numerous Post Office savings schemes, and the best way to make an informed decision is to compare them. Here is a tabular overview of POTD and other Post Office savings schemes:

Disclaimer: The above rates and details are subject to change, and are accurate as of September 2023. 

There is no source-tax withholding (TDS) for small savings investments at post offices. The interest on these investments is added to your total yearly income and is subject to taxation at your slab rate.

Moreover, under Section 80C of the IT Act, 5-year term deposits are eligible for tax advantages. However, the maximum deduction available is ₹1.5 Lakhs, which includes deductions from other investment avenues, such as PPF, EPF, NPF, and more.

If you are a risk-averse investor, then opening a Post Office Time Deposit account is for you. Keep in mind that the Post Office Time Deposit interest rate gets revised regularly, so invest wisely. If you want to invest in regular FDs, you can easily do so on Bajaj Markets and choose from the top issuers in India.