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Post Office Fixed Deposit & Its Benefits
The post office fixed deposit (POFD) also known as post office time deposit is great alternatives to the banks fixed deposits. The post office fixed deposit schemes offered by Indian Postal Service provides guaranteed return to the individual and helps them to accumulate wealth for a specific period of time.
Returns as high
as 7.5%*
Includes life cover
Completely Tax free+
as 7.5%*
Includes life cover
Completely Tax free+
Maximum returns Offered by
Guaranteed
Highest
7.5%*
Guaranteed Plan
(by insurance companies)
(10 Years)
6.5%**
Fixed Deposits
(by SBI bank)
(5-10 Years)
7.1%***
Public Provident Fund
(other popular options)
(15 Years)
We are rated~
58.9 Million
Registered Consumer
51
Insurance Partners
26.4 Million
Policies Sold
In-built life cover
Get Guaranteed returns along with life cover
invest in 100% Guaranteed Return Plans Tax benefits under sec 80C & No Tax on returns+
Depending on the maturity tenure as chosen by the investors, the Post Office Fixed Deposits offers attractive returns on investment. Let’s read further to know in detail about Post Office Fixed Deposit scheme.
Benefits of Choosing Post Office Fixed Deposit
Let’s take a look at the benefits offered by Post Office Fixed Deposit.
- Guaranteed Returns: As a government backed savings scheme, the post office fixed deposit is one of the safest option of investment and offers guaranteed return.
- Considerable Interest Rate: The post office fixed deposit offers an interest rate of 6.7%. The interest rate offered by POFD is more likely to result in higher returns as compared to other investment schemes.
- No Volatility: As one of the safest option of investment, the returns offers by post office fixed deposits are not affected by the market fluctuations. This means that irrespective of market fluctuations, the investors earns the same interest.
- Other Facilities: The POFD scheme allows the investors to avail tax exemption on the interest earning. Moreover, they can also withdraw the invested sum prematurely and avail loan against the value of post office fixed deposit plan.
Interest Rates
The interest rate of POFD is revised by the government of India on quarterly basis of the final year. The tenure of these scheme ranges between 1 year and 5 years. Let’s take a look at the post office fixed deposit interest rate.
| Period | Interest Rate for Q4 of FY 2020-21* |
| 1 year | 5.5% |
| 2 years | 5.5% |
| 3 years | 5.5% |
| 5 years | 6.7% |
*Please note that the interest rate on post office fixed deposit remains the same for senior citizens as well as for regular customers.
Eligibility Criteria
Any Indian resident can open an individual or joint post office time deposit account. Minors are also eligible to invest in post office fixed deposit scheme, managed by their legal guardian. However, NRIs, companies, trust are not eligible to invest in Post Office Fixed Deposit account.
Documents Required
These are the documents that should be kept handy while opening post office FD account.
- Address Proof – Telephone bill/electricity bill/ passport/ post office issued ID or certificate/ bank statement inclusive of cheque.
- Identity Proof- PAN card/ voter ID/driving license/ Aadhaar card/ Passport.
Also, the subscriber must provide the detail of the beneficiary for the FD. It is also important for subscriber to present a witness while signing the investment paper.
How to Invest in Post Office Fixed Deposits?
An individual can use either online or offline method to open Post office fixed Deposit or time deposit account.
Mobile Banking Method
- Download the app of Indian Post Mobile Banking in your phone from Google play store.
- Login to the app using the credentials.
- Click on requests tab on the home screen to open the Post Office FD account.
- Enter the details like tenure, beneficiary, deposit amount, the account from which you want to deposit the money, etc. to open the account.
Offline Method
- Visit the nearest post office and fill the application form with relevant details. You can also download the form from the post office official website.
- Attach all the required documents along with the application form.
- Visit the post office branch where you have opened your savings account.
- Submit the form along with the required documents to the relevant person at the branch to open the savings account.
Read Also: Post Office MIS Calculator
Premature Withdrawal
The post office FD schemes offer the facility of premature withdrawal. However, before making an premature withdrawal, here are some of the aspects that should be kept in mind.
- An individual should invest for at least 6 months before making a premature withdrawal. On withdrawal of POFD, the principle amount is returned to the investor along with simple interest as per the PO savings account interest rate.
- For Post Office FD schemes with a term period of 2 years and above, a 1% reduction is charged in the proposed interest before giving the funds to the individuals.
* Applicable for Titanium variant of Max Life Smart Fixed-return Digital (Premium payment of 5 years, Policy term of 10 years) and a healthy male of 18 years old paying Rs. 30,000/- monthly (exclusive of all applicable taxes)
** Fixed deposit rate applicable for 5 year's 1 day to
10 years for investment amount less< 2 Crore ( Not for senior citizens).
*** PPF interest rate applicable for 15 years
for investment amount upto 1.5 Lac
+ Trad plans with a premium above 5 lakhs
would be taxed as per applicable tax slabs post 31st march 2023
#Discount offered by insurance company
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
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