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 around 1,55,000 post offices. In this way, it is one of the more widely distributed postal service networks of India. In addition to the delivery of mails and couriers, the Post Office offers benefits of savings accounts, recurring deposits, and fixed deposits with good post office interest rates.
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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:
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 | Regular Citizens | Senior Citizens |
1 year | 5.50% | 5.50% |
1 year 1 day to 2 years | 5.50% | 5.50% |
2 years 1 day to 3 years | 5.50% | 5.50% |
3 years 1 day to 5 years | 6.70% | 6.70% |
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
The Post Office schemes do not offer extra interest rates to senior citizens. In this way, the earnings are the same for people depositing the same amount of money irrespective of whether the investor is more or less than 60 years old.
The following table highlights a comparison of the Post Office FD Rates between the period from December 2019 to March 2020 and from April 2020 to the present time.
Tenure | December 2019 - March 2020 | April 2020 to the present time |
1 year | 6.90% | 5.50% |
2 years | 6.90% | 5.50% |
3 years | 6.90% | 5.50% |
5 years | 7.70% | 6.70% |
List of Bank | FD Interest Rates 2023 of Indian Banks | Post Office FD Interest Rate 2023 | |
Regular Citizen | Senior Citizen | ||
HDFC Bank | 2.5% - 5.6% | 3.00% - 6.35% | 5.5% - 6.7% |
State Bank of India | 2.9% - 5.5% | 3.4% - 6.3% | 5.5% - 6.7% |
Punjab National Bank | 2.9% - 5.25% | 3.4% - 5.75% | 5.5% - 6.7% |
Axis Bank | 2.5% - 5.75% | 2.5% - 6.5% | 5.5% - 6.7% |
Canara Bank | 2.9% - 5.25% | 2.9% - 5.75% | 5.5% - 6.7% |
Bank of India | 2.85% - 5.05% | 3.35% - 5.55% | 5.5% - 6.7% |
Union Bank of India | 3% - 5.5% | 3% - 5.5% | 5.5% - 6.7% |
Karnataka Bank | 3.4% - 5.5% | 3.8% - 5.9% | 5.5% - 6.7% |
IDBI Bank | 2.7% - 5.5% | 3.2% - 6% | 5.5% - 6.7% |
Bajaj Finance | 5.51% - 6.8% | 5.76% - 7.05% | 5.5% - 6.7% |
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
The post office FD interest rate compounds quarterly and is payable annually.
The interest rate applicable during the first deposit remains constant throughout the FD tenure.
Depositors can choose to receive the interest amount directly to their bank accounts.
Interest is only payable on the deposit amount. If the credited interest is not withdrawn by you, no interest shall be payable on the interest amount.
If you do not withdraw the sum on maturity, the final amount will not earn any interest unless you extend the tenure.
If you extend the tenure, the maturity amount earns interest at the prevailing rate as on the date of extension.
The basic features of a 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 |
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Premature withdrawals from the Post Office FD account can be made on submitting an application in Form-4.
Withdrawals are not permitted within 6 months from the date of deposit.
If the withdrawal is made after 6 months but within 12 months from the date of deposit, the interest applicable for those number of months is paid.
Account holder has to submit the application form for extension of the account, which is Form-3.
Once the tenure of your FD account expires, you can extend the tenure.
However, the window for extension is up to a few months only. If the tenure is not extended, the account holder has to compulsorily withdraw the amount on maturity.
Maturity can be extended twice from the date of the first deposit.
For a 1 year FD, you can extend the account 6 months from the date of repayment.
For a 2-year FD, an extension can be exercised 12 months from the date of repayment.
For a 4-year and 5-year FD, the extension can be exercised 18 months from the date of repayment.
If the account holder dies, the deposit amount is paid to the assigned nominees or legal heir.
If there is more than one legal heir, the amount is paid in proportions as specified by the account holder.
If proportions have not been specified, the amount shall be paid in equal proportions to all the legal heirs.
The deposit amount is paid to the guardian in case the nominee is a minor.
The Post Office FD account can be continued by the surviving heirs or nominees. If not, the account shall be closed and the deposit amount paid to the nominees.
Your Post Office FD deposit can be pledged as security on the submission of Form-5 and an acceptance letter from the pledgee.
The account can be transferred to the President of India or the Governor of a State, the Reserve Bank of India or a Scheduled Bank or a Cooperative Bank, a public, private, or Government company, a housing finance company approved and notified by the National Housing Bank and the Central Government, respectively.
If an account was opened for a minor and the same has to be pledged, the guardian must certify that the child is alive. Further, the guardian also has to establish that the transfer shall benefit the minor.
The above condition also holds true for an account opened on behalf of a person of unsound mind.
An authorized officer needs to endorse the pledging if it is being transferred as security.
A person physically unfit to pledge the account can do so by authorizing another person.
Post Office Fixed Deposit scheme is one of the preferred choices of savings for many given the backing of the Indian sovereign. Apart from the higher post office FD interest rates, here are some of the most prominent benefits of having a Post Office FD scheme are:
This is a government scheme, so the Indian government takes the guarantee. This makes the investors more secure about their savings.
One can open an account offline or online through net banking.
As it is a not-for-profit establishment, its primary focus is on social welfare.
No tax (TDS) is charged on the interest earned with a post office FD account.
One can make the deposits individually or jointly for a maximum of three members.
Deposits that are made for five years qualify for tax deductions through the gross salary when the ITR (Income Tax Return) is filed (under section 80C). The maximum tax deductions can range up to Rs. One Lakh Fifty Thousand per Financial Year.
One can easily transfer their 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 open an FD account under guardianship as well.
Nominees can be added even after account opening.
The below-mentioned people are eligible to open a Post Office 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 of the benefits or open an FD account.
An investor must furnish the below-mentioned documents to open a Post Office Fixed Deposit account:
This is the application form to open an account.
Electricity Bill
Telephone Bill
ID or certificate issued by the Post Office
Bank statement including the cheque
Passport
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 when they are going to sign the paper of investment.
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 to know the applicable interest rates of post office FD through the complete tenure.
In this tool, one has to enter the amount to be deposited, current Post Office FD interest rates, and tenure.
Total Investment (Rs.) | Interest Rate (%) | Policy Tenure | Returns (Rs.) | |
Interest Earned | Maturity Amount | |||
50,000 | 6.7 | 3 years | 10,738 | 60,738 |
1 Lakhs | 6.7 | 3 years | 21,477 | 1,21,477 |
5 Lakhs | 6.7 | 3 years | 1,07,384 | 6,07,384 |
10 Lakhs | 6.7 | 3 years | 2,14,768 | 12,14,768 |
For opening the Post Office Fixed Deposit account, one can either use online or offline mode:
The facility to open an account is available online through net banking. The internet banking service in the post office has been available since 2018. Investors can use the net banking facility to transfer funds across different post offices. 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 platform of the Post Office
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.
For opening a 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 you through the complete FD opening process.
Ensure to take the receipt after successfully opening the FD account for future references.
One of the most significant 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. Since Post Office FDs are meant for the low-income groups, there is no tax liability. However, if the interest earned exceeds Rs. 40,000 (in the case of regular customers) and Rs. 50,000 (in the case of senior citizens) in a financial year, TDS may be deducted.
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. The tax benefit is subject to changes in tax laws.