One of the popular and traditional schemes that Indian post offices have been offering for years is the saving schemes. Many Indian households still prefer putting their hard earned money in a Post Office fixed deposit scheme as it is backed by the Government of India. Also, people who do not have a bank in their vicinity can invest in the nearest Post offices as well.
Save upto ₹46,800 in tax under Sec 80C
Inbuilt Life Cover
Tax Free Returns Unlike FD
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
People in rural areas invest more in post office deposits in comparison to bank deposits. Nowadays the government allows private banks and public sector banks to open a post office fixed deposit scheme for its customers.
A fixed deposit is an investment scheme that allows one to deposit in fixed deposits in order to earn interest on the investment. The duration of these FD is 1-year, 2-years, 3-years and 5-years. The fixed deposit interest rate currently varies from 6.9% to 7.7%. The FD interest that is paid is charged with Tax Deduction at Source (TDS). By investing in this deposit scheme one can get tax benefits under section 80C in the old tax regime.
The FD scheme or post office time deposit makes a good alternative to the bank FD. Indian Postal Services enable an individual investor to invest money in a post office fixed deposit scheme and earn a guaranteed return on the deposited amount for a fixed span of time.
The account can be opened by:
Post office savings account holders with internet banking facility can open FD or Post Office time deposit (POTD) scheme online.
A post office fixed deposit scheme is suitable for conservative investors like retirees or those about to get retired. It makes an ideal investment option for those who are looking for a low-risk investment option with a steady income along with capital protection.
Both cash and cheque payments can be done to open a post office fixed deposit scheme. If the payment is done via cheque then the date of realization of the cheque shall be considered as the date of opening the account. However, NRIs cannot open a post office fixed deposit scheme.
From premature withdrawals to the integration of savings account or integration with recurring deposits, there are various features and advantages that follow. Some of them are discussed below:
The government decides the FD interest rate that is paid every year but is calculated quarterly. The FD interest rates for January 2020 to March 2020 remain the same as in the previous quarter and are given in the table below:
Scheme |
Post Office Fixed Deposit Interest Rate (in %) |
1-year |
6.9 |
2-years |
6.9 |
3-years |
6.9 |
5-years |
7.7 |
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
A FD calculator makes a great investment tool to calculate the returns on FDs:
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Once the post office branch is selected to open the time deposit account, the following documents are required: