Post Office Fixed Deposit Interest Rates

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It was the year 1854 when Lord Dalhousie (Governor-General of India then) formed Indian Post. Since then this agency of the government is serving India in its 23 circles with 1, 55, 000 post offices. In this way, it is one of the widely distributed postal service networks of India.

With the delivery of mails and couriers, the Post Office is as well offering options for savings accounts, recurring deposit and fixed deposits with good post office interest rate. Some other investment policies offered by this government organization are Small Savings Scheme, Senior Citizen Savings Scheme, National Savings Certificate, Postal, Life Insurance, etc. Today, in this article we are going to discuss the FD interest rates offered by the Post Office of India:

Post Office FD Interest Rates

The FD schemes of the Post office offer attractive investment returns that depend on the tenure of maturity selected by the investor. The range of the tenure is between one to five years. The below-mentioned table shows the updated Post Office interest rates.

Tenure of FD

Interest Rate (% per annum)

One year

5.5%

Two Years

5.5%

Three Years

5.5%

Five Years

5.7%

Note: The above-mentioned rates of FD interest are effective from April 1st, 2020 till June 30th, 2020.

The FD schemes do not offer some extra interest rates to the senior citizens. In this way, the earnings on some particular sum are the same irrespective of whether the investor is more or less than 60 years old.

Characteristics of Post Office Fixed Deposit Account

The basic features of fixed deposit account are mentioned below:

Feature

Details

FD Tenure

One, two, three, and five years

Rate of Interest

5.50% to 6.70%

Minimum Deposit Amount

Rs. 1, 000

Interest Payment

Annually

Premature Withdrawal

It is allowed after six months

Payment Mode

Cheque / Cash

Facility of Nomination

Available

Advantages of Post Office FD

Post Office Fixed Deposit scheme is one of the preferred choices of many. The reason for the same is the advantages offered by it. Apart from the higher post office interest rates, here are some of the most prominent benefits of having a FD scheme are:

  • This is a government scheme, so the Indian government takes the guarantee, thus the investors feel the security of the highest level.
  • One can open an account offline or online through the net banking.
  • As it is one of the non-profits making establishment, thus its major focus is on social welfare, which is the main USP of this scheme.
  • No tax (TDS) is charged on the earned post office interest rates.
  • One can make the deposits individually or jointly for a maximum of three members.
  • Deposits that are made for five years qualify the tax deductions through the gross salary when the ITR is filed (under section 80C for up to Rupees. One Lakh Fifty Thousand per Financial Year).
  • One can easily transfer his/her FD account from one Post Office to another.
  • One can open more than one FD account in any of the Post Offices.
  • A minor can as well open an FD account under a guardianship.
  • Nominees can be added even after account opening.

Eligibility Criteria for Opening a Post Office FD Account

The below-mentioned people are eligible to open a fixed deposit account:

  • Any resident of India can open this investment account either individually or jointly.
  • The minors are also eligible to open a post office FD account, however, it should be under the guidance of some legal guardian.
  • Companies, trusts, NRIs, and other organizations are not eligible to avail the benefits or open a FD account.

Documents Required

An investor must furnish the below-mentioned documents to open a Post Office Fixed Deposit account:

  • Address Proof
    • Electricity Bill
    • Telephone Bill
    • ID or certificate issued by the Post Office
    • Bank statement including the cheque
    • Passport
  • Identity Proof
    • Pan Card
    • Voter ID Card
    • Driving License
    • Aadhaar Card
    • Passport
    • Photo Ration Card

In addition to all the above-mentioned documents, an investor has to provide the nominee’s details. There has to be a witness one he/she is going to sign the paper of investment.

Post Office FD Calculator

Before start investing in the post office FD scheme, it is suggested to use the FD Calculator to know FD interest rates. One can use the FD calculator of Policybazaar for free for knowing the interest rates that he/she may get through the complete tenure at the applicable rates of post office FD.

In this tool, one has to enter the amount to be deposited, current Post Office FD interest rates, and tenure.

As soon as one enters the details and hit the calculate button, for estimating the earned interest and the amount at maturity separately.

The process to Open Post Office FD

For opening the Post Office Fixed Deposit account, one can either use online or offline mode:

Online Mode: The facility to open an account is available online through Intra operable mobile/ net banking. The internet banking service in the post office is available since 2018 through which the funds within different post offices can easily be transferred. For opening this account online, the customers should have the following documents:

  • An active and valid savings account
  • Verified KYC document
  • PAN card
  • Valid email id and mobile number
  • An active debit card or DOP ATM
  • Steps to Open Post Office FD Online:
    • Step 1: With the registered user id and password, log in to the e-banking of the Post Office (https://ebanking.indiapost[dot]gov[dot]in).
    • Step 2: Click on General Services.
    • Step 3: Search for the ‘Service Request’ and open it.
    • Step 4: Make the Time Deposit or Fixed Deposit opening request by using the option of ‘New Request’.

Follow further steps to complete the process.

  • Offline Mode: For opening Fixed Deposit account offline, one has to follow the below steps:
    • Get all the required documents and visit the nearest branch of the Post Office.
    • Get in touch with an official regarding the FD opening in the Post Office.
    • Enquire about the current FD interest rates there.
    • The concerned person will guide through the complete FD opening process.
    • Ensure to take the receipt after successfully opening the FD account for the references of the future.

Post Office Fixed Deposits – Tax Benefits

One of the biggest advantages of investing in Fixed Deposits of Post Office is that no tax or TDS is deducted on the earned interest. The main reason for the same is the nature of FD which is to provide benefit to the low-income groups and hence there is no tax liability.

An investor can add the fixed deposit investment in Post Office for claiming the deductions under section 80C of the IT Act, 1961. For every financial year, one can show a maximum of Rs.1.5 Lakhs in Post Office FD. Tax benefit is subject to changes in tax laws.

FAQs

Question 1: What are the maximum interest rates offered on the FDs of Post Office?

Answer: Currently, the Post Office FDs provide a maximum interest of 5.7% for tenure of five years.

Question 2: Which is better Post Office FD or Bank FD?

Answer: The Post Office FDs are also called Small Savings Scheme and they offer comparatively better returns and rates than deposits of banks.

Question 3: Is Post Office FD safe?

Answer: Yes, investing in Post Office FD is safe as it is the Post Office's product and is offered under the National Savings Scheme. The Indian Government takes its guarantee and hence it is safest to invest in it.

Question 4: Which scheme gives the highest interest rate?

Answer: FD scheme provide the highest post office interest rate than Bank FD interest.

Question 5: Does the Post Office provide loans?

Answer: Post Office allows its customers to get loans against their FDs value.

Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
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