What Exactly Is The FD Post Office? What Are The Current Interest Rates?

The Government of India’s Department of Posts, Ministry of Communications, offers fixed deposit accounts that offer attractive interest rates with tenures that range from 1 year up to 5 years. The interest is payable annually with the minimum deposit being Rs.1,000 and no maximum limit.

Post Office Time Deposit Account

The Post Office Time Deposit (TD) Account, also known as the Post Office Fixed Deposit (FD) account, can be opened with a minimum of Rs.1,000 in multiples of Rs.100, with no maximum limit.

Highlights of Post Office FD Interest Rates

1. Highest Post Office TD interest rate: 6.70% p.a. for a tenure of 5 years
2. Range of interest rates: 5.50% p.a. to 6.70% p.a.
3. Interest rate for a tenure of 1 year: 5.50% p.a.
4. Interest rate for a tenure of 2 years: 5.50% p.a.
5. Interest rate for a period of 3 years: 5.50% p.a.

Features of Post Office Fixed Deposit

1. Account can be transferred from one post office to another anywhere in the country
2. Any number of accounts can be opened in any post office anywhere in the country
3. A single account can be converted into a joint account and vice versa
4. Nomination facility is available at the time of opening the account and afterwards too
5. Account can be opened by cheque or cash
6. Minimum amount is Rs.1,000.
7. There is no maximum limit to the deposit
8. A minor’s account has to be converted after attaining majority
9. The tenure can be extended by making an application
10. Interest is payable annually
11. Interest is credited into the holder’s savings account
 

Who Can Open A Fixed Deposit Account?

A time deposit account with India Post can be opened by:

1. A single adult
2. Maximum of three adults (in the case of a joint account)
3. A Minor who is above 10 years of age
4. A guardian on behalf of an individual who is a minor or a person of unsound mind

Premature Withdrawal of Post Office FD

Premature withdrawal of a Post Office FD or Term Deposit can be made between 6 months to 1 year of the date of opening the account. However, withdrawal is not allowed before 6 months from the date of opening the account.

TDS Deduction on Post Office FD

You can avail a tax deduction under Section 80C of the Income Tax Act, 1961, for deposits with a tenure of 5 years. This rule is applicable from 1 April 2007.

Post Office FD calculator

To know exactly how much you will earn with interest on a Post Office Fixed Deposit account even before you open it, use an online FD calculator which is free and easy to use
All you have to do is enter the amount you wish to invest, the current rate of interest for the tenure you wish to invest in, and the type of interest compounding frequency
The exact amount you will earn with interest will be instantly displayed on the page

Conclusion

The one-year, two-year, and three-year term deposit have no upper limit when it comes to investment, while the five-year fixed deposit allows a maximum amount of Rs.1.5 lakh per year. It needs to be mentioned here that individuals who invest in the five-year term deposit qualify for income tax benefit under Section 80C of the IT Act.

Also Read: Explore The Various Investment Options Available In India.