The fixed deposits are considered as one of the best tax saving schemes, especially if they have a tenure of more than five years. However, currently, when SBI fixed deposit rates and fixed deposit rates of other banks are going down, small saving schemes like post office term deposits are lucrative investment schemes for the investors who have a low-risk appetite. For the information of these investors, the term deposits of the post office as well offer IT exemption if they deposit their money for five years.
Save upto ₹46,800 in tax under Sec 80C
Inbuilt Life Cover
Tax Free Returns Unlike FD+
While comparing the rate of interest offered by the State Bank of India fixed deposits for a tenure of five years and post office term deposit for the same tenure, the difference comes around 1.3%. On one hand, where SBI fixed deposit rates are 5.4%, the other hand, post office term deposits offer an interest rate of 6.7% when the investment is made for five years. In fact, from 01st April 2020, the new interest rates for post office term deposits have come into picture wherein for one year, two-years, and three years fixed deposits are 5.5% whereas, for fixed deposits of five years, the rate of interest is 6.7%.
So, for illustration, if we invest Rs.1 Lakh for five years in State Bank of India Fixed Deposit account and the same amount for the same tenure in Post Office Term Deposit, then SBI Fixed Deposit will give Rs. 64, 362 as interest, and the final amount will be Rs. 1, 64, 362. Whereas in the Post Office Term deposit, this money will become Rs. 2, 00, 016 in five years. This clearly shows that money will be doubled in post office term deposit in comparison to fixed deposits of SBI.
Therefore, despite being the same as bank fixed deposits, post office term deposits provide guaranteed returns. Here, we are providing a comparison of SBI Fixed Deposit scheme and Post Officer Term Deposits:
You May Also like to read: National Savings Certificate Vs Fixed Deposits
Tenure |
FD Rates for Normal Public |
FD Rates for Senior Citizens |
Seven Days - 45 Days |
2.90% |
3.40% |
46 Days - 179 Days |
3.90% |
4.40% |
180 Days - 201 Days |
4.40% |
4.90% |
211 Days - 364 Days |
4.40% |
4.90% |
One Year - One Year 364 Days |
5.10% |
5.60% |
Two Years - Two Years 354 Days |
5.10% |
5.60% |
Three Years - Four Years 364 Days |
5.30% |
5.80% |
Five Years - 10 Years |
5.40% |
6.20% |
Tenure |
Post Office Term Deposit Rates for Normal Public |
Post Office Term Deposit Rates for Senior Citizens |
Seven Days - One Year |
5.50% |
5.50% |
One Year One Day - Two Years |
5.50% |
5.50% |
Two Years One Day - Three Years |
5.50% |
5.50% |
Three Years One Day - Five Years |
6.70% |
6.70% |
Summing It Up:
Being a wise investor, it is advised to nurture all the options of the investment and after that make an informed decision of investment. Even though both SBI and Post Office are government-backed up schemes, where your money is safe, but after seeing the rate of interest and final amount upon completion of the maturity period Post Office Term Deposits are recommended. In addition to this, the Post Office also offers many other investment schemes like National Savings Certificate, Senior Citizens Savings Scheme, Kisan Vikas Patra, Public Provident Fund, Monthly Income Scheme, etc. Almost all these schemes offer an interest rate that is more than seven percent and in addition to this, the rate of interest in these schemes is revised every quarter. So, it is up to the investor what he/she selects as deciding according to his/her requirements is always suggested.
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ