Post Office Time Deposit Scheme

The Post Office Time Deposit Account is a prominent investment scheme that is offered by the Indian Post. This scheme is open to every individual and is more popular in the remote and rural areas of the nation,

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which relatively has limited access to investment products.

Features of Post Office Time Deposit

The following are the key features of Post Office Time Deposit:

  • Options of Multiple Lock-in Period

    The depositors have the option to open the time deposit account for a period of 01, 02, 03 or 05 years. However, the account term will be extended by simply giving an application to the post office.

  • Low Minimum Deposit

    The minimum sum required to open the account is Rs 1000. The individuals can deposit the amount in multiples of Rs 1000; however, there is no maximum upper limit cap. The initial deposit can be made either in cheque or in cash. If the payment is made via cheque the encashment date will be set as the opening date of the account.

  • Premature Withdrawal

    The POTD account does not permit premature withdrawal within the initial 06 months. In case the corpus is prematurely withdrawn the post office time deposit rate between 06 months and 12 twelve months is going to adhere to the prescribed rate for the savings account.

  • Interest Post Maturity

    Anyone who does not withdraw the amount even after maturity of the time deposit account won't receive any extra interest. In case the post office has a core banking solution, then the time deposit can be renewed for the same term that was selected originally. The POTD interest rate is going to be applicable at maturity after the renewal.

  • Interest Payment

    The interest with the principal is going to be paid either in cheque or cash. Any payment that higher than the sum of Rs 20,000 will be made with a cheque.

  • Tax Benefits

    The income tax benefits are accessible only for the 05-years. The depositor will be able to claim the income exemptions up to Rs 1.5 lakh under Section 80C.

Note: Tax benefits are subject to change as per the prevailing laws.

Eligibility Criteria

Anyone who is looking forward to opening the account should meet the following criteria:

  • Any citizen of India can open a single account.
  • The individual can open a joint account with up to three adults.
  • A minor who is 10 years of age and more can not only open but also operate the account.
  • On behalf of the minor, a parent or guardian can also open the account.
  • On behalf of the person of an unsound mind, the guardian can open the account.

The NRIs are not permitted to open the post office time deposit account. Besides groups or funds, such as welfare funds, trust funds, regimental funds and institutional account holders as well cannot access the post office time deposit scheme.

Interest Rates

The Finance Ministry of India reviews the rate of interest in the scheme at the commencement of each quarter of the tax year. The interest rate is determined upon the yield on the government securities and has encompassed the government segment yield.

The table below shows the interest rate that applies from January 01, 2019, to March 31, 2019:

Account Term

Interest Rate Applicable

01 year

6.9%

02 years

6.9%

03 years

6.9%

05 years

7.7%

Documents Required

The following are the important documents that need to be submitted to open the account:

  • Filled application form of Post Office Time Deposit Scheme
  • Passport size photographs
  • Identity Proof: PAN card, Aadhar card or Voter ID
  • Address Proof: PAN card, Ration card, Aadhar card, Voter ID or Driving license
  • Income Proof: Salary slips of the last three months or statement of the bank account of the recent six months

You May Also Like: Post Office Monthly Income Scheme

How to Open the Post Office Time Deposit Account?

An individual can open the post office time deposit account at any of the post office in the country both offline and online. But before one opens the account online the prerequisites like an active mobile number, valid KYC documents, email id, PAN card and savings bank account needs to be met.

  • Opening the POTD Account Online

    • Visit the official website of India post and sign in to the account using valid credentials.
    • Under the section of ‘General Services’, simply click on the option of ‘Service Request’
    • To request to open the Post Office Time Deposit Account, click on the tab ‘New Request’.
    • Enter all the details correcting while filling the form.
    • Make the initial contribution sum and then click on the tab ‘Submit’ for the form to be submitted successfully.
    • A confirmation message in regards to the same will be shared on the email id registered.
  • Opening the POTD Account Offline

    • With all the important details, complete the application form
    • While submitting the form attach all the KYC documents and a passport size photograph.
    • The individual should visit the post office that where a savings account has been maintained.
    • Submit the application form by making the initial contribution sum of Rs 1000.

How to Make Contributions to the Time Deposit Account?

The individual can make contributions to the Post Office Time Deposit Account online in the following way:

  • Either download the mobile application ‘India Post’ and sign in using the credentials required.
  • Open the Post Office Time Deposit Account by tapping on the tab of ‘Requests’.
  • Fill in the details for example the deposit sum, term, account from, which the deposit amount will be debited and so forth.
  • To deposit to the TD account, further, go to the section of ‘Transfers’ and accordingly follow the steps.

Rules of Withdrawal

The post office time deposit account allows the account holder to withdraw the funds before it matures. The applicable condition is that 06 months should have been passed right from the initial deposit to qualify for premature withdrawal. Listed below are the important terms and conditions for the premature withdrawal of the POTD:

  • The premature withdrawal of the 01, 02, 03 or 05 years account will be made after completing 06 months; however, before completing 01 years from the date of account opening of the time deposit.
  • The premature withdrawal of the 01, 02, 03 or 05 years account is made after 01 years right from the account opening date. The interest rate applicable is 01 per cent low than the rate of interest corresponding to the account term that was booked for originally.

Read Also: Post Office Senior Citizen Saving Scheme

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Written By: PolicyBazaar - Updated: 02 July 2021
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