Post Office Time Deposit

Post Office Time Deposit Account is similar to a bank Fixed Deposit. It can be opened singly or as a joint account from any Post Office and nominate persons you choose. You can make deposits for a term of 1 year, 2, 3, or 5 years. Post office fixed deposit rates varies with the term chosen. Investment of up to Rs 1, 00,000 only in the 5-year term deposits can be claimed for tax deduction under section 80 C. Interest is taxable but tax won't be deducted at source.

Min & Max Investment

Min- Rs 200, Max- no limit

Current Rate of Interest

1 yr -   8.20%

2 yr -   8.20%

3 yr -   8.40%

5 yr.-   8.50%

Maturity/ Tenure

1 yr, 2 yrs, 3 yrs, 5 yrs

Tax Benefit

Sec 80 C benefits on 5 year deposit

You can pledge your time deposit in post office as security for availing loan. If the post office fixed deposit account is closed prematurely after 6 months and before 1 year of opening it you get no interest. But if closed after 1 year you get an interest with payment of a penalty fee. If you choose to leave your money in the account after maturity it earns interest for 2 years at the rate applicable in Post Office Savings Account at that time.

Recommendation

Given that interest rates of post office time deposit are much lower than those in bank time deposits and knowing that service levels cannot be matched with those in banks there is no merit in depositing in post office time deposit.


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