Post Office Fixed Deposit also known as Post Office Time Deposit are one of the most preferred investment options offers by Indian Postal Services. As a government backed savings scheme, post office fixed deposit are considered one of the safest options of investment, which offers guaranteed returns. Similar to banks FDs, the interest amount of POFD schemes can be calculated by using post office fixed deposit calculator in an easy and hassle-free manner.
In post office fixed deposit scheme, the subscribers need to contribute for a specific tenure and fixed interest rate. The higher the investment tenure will be the higher interest an individual will be able to earn on the contribution made towards the scheme.
The Post Office FD account can be opened for tenure of 1, 2, 3 and 5 years with different interest rates of specific year. The interest applicable on POFD is subject to TDS. Let’s take a look at the post office fixed deposit interest rates.
By using Post Office Fixed Deposit calculator an individual can compute the interest payout easily. To calculate the interest amount, the individual will need to use the formula of compound interest.
Maturity Amount = Principal * ( 1+Interest Rate /4)^(n*4)
Where n is the number of years
And the interest rate should be the annual rate. Also, the above formula is for interest compounded quarterly.
Let’s understand with an example.
Suppose a person has deposited 1 lakh at 6.8% interest for 5 years, the maturity amount would be
Maturity Amount= 100000*(1+.068/4) (5*4)
Maturity Amount= Rs.1,40,360
Interest Gained = Rs. 40,360
The interest on post office FD is computed quarterly but paid annually. At the time of redemption the accumulated sum will be given to the individual via cheque. The interest earned is fully taxable. It is added to the annual income of the investor and is taxed at the applicable tax rate.
The minimum deposit an individual can make towards the POFD scheme is Rs.200 and thereafter in multiples of INR 200. An individual can open a joint or individual FD account in post offices. The individual can open post office FD account in all public and private sector banks. Moreover, it can be transferred from one post-office to another in a simple and hassle-free way.
The premature withdrawal from post office fixed deposit scheme can be made only after completion of 6 months. After completion of 6 months the premature withdrawal can be made at a penalty of 1%. After completion of maturity tenure, the subscriber can reinvest the maturity amount into the Post office FD scheme or can redeem the maturity amount. Moreover, the investor can also take loan against Post Office Fixed Deposit by requesting the post office.
Here are some of the benefits of using Post Office Fixed Deposit calculator.