Post Office Fixed Deposit is one of the most favorite investment options in rural and suburban areas. Post Office Fixed Deposit is similar to a bank fixed deposit, where you need to deposit money for the fixed period of time and you can get a guaranteed return on that. This type of deposit is also known as Post Office Time Deposit Account (TD). The interest rate applicable to post office fixed deposit is variable and declared by the government time to time. At the end of the term, you will get principal amount along with interest earned on that. You have the option to select a term from 1 year to 5 years. Higher the term better is the interest. In this post, we will discuss everything about Post Office Fixed deposit starting from maturity, withdrawal rules to Post Office Fixed Deposit Interest Rates 2018.
First Let’s take a look at the current interest rate applicable to post office fixed deposit schemes.
Also Read – 10 Best Ways to Invest 1 Lakh for good returns
Post Office Fixed Deposit Interest Rates 2018
You can get an interest rate of 7.4% on Time Deposit of a post office for 5 years. Please refer to the following table to know about current interest rate applicable to post office fixed deposit.
|1 Year Account||6.6%|
|2 Year Account||6.7%|
|3 Year Account||6.9%|
|5 Year Account||7.4%|
The interest rate shown above is applicable from 1st January 2018. The fixed deposit rates in the post office are variable and changed time to time. Therefore, make sure to check the current post office fixed deposit interest rate, before opening an account.
How to Open Post Office Fixed Deposit Account?
The Indian post office has a wide reach. In India, we have around 1.5 Lakh post office. You can visit any of the nearest post office and open time deposit account. You require following documents in order to open this account.
- Account Opening Form for the nearest post office.
- Two passport size photographs.
- Photo ID Proof – You can submit passport, driving license, election card or Aadhaar Card.
- Address Proof – You can submit passport, telephone bill, electricity bill or salary slip with the address.
- Photocopies of the mentioned document should be self-attested. In case the account is opened via an agent, self-assentation of an agent on the documents is required.
You need to fill up the form and submit photocopies of mentioned documents. Make sure to provide nomination detail while opening an account. You need to bring original document for the verification. You will also need one witness to complete the procedure.
You can download a post office account opening form from here.
Also Read – PPF Account Calculator Download
Key Features and Benefits of Post Office Fixed Deposit
- Anyone can open Post office Time Deposit Account. Minimum Investment required for this account is Rs.200.
- A Minor with 10 years of age can open this account.
- A Joint account can be opened by two adults. There is no restriction on a number of accounts.
- This account can be opened by both cash and cheque. In case of cheque date of opening account will be the date of realization of cheque.
- The maximum Tenure of this fixed deposit account is 5 years.
- Nomination Facility is available at the time of opening account.
- The account is transferable from one post office to another.
- Minor after attaining majority age has to apply for conversion of the account in his name.
- Fixed Deposit will be automatically renewed after attaining maturity period.
- One can get tax benefit on Investment made for 5 years scheme under section 80C.
- One can get an advantage of capital protection as the scheme of post office time deposit is backed by the government of India.
- It offers guaranteed return committed at the time of opening account.
- It offers liquidity as you can withdraw money anytime. You can also borrow money against this deposit.
Post Office Fixed Deposit – Tax Benefits
For small tenure tax benefit is not applicable. You can get tax benefit only if fixed deposit account is opened for 5 years. The tax exemption benefit is under section 80C of Income Tax Act. The maximum limit applicable for the tax benefit is 1.5 Lakh.
Post Office Fixed Deposit – Withdrawal Rule
The premature closure of fixed deposit is allowed. However, there are certain specific conditions. You cannot withdraw your account prematurely only after 6 months of the deposit.
If the account is withdrawn prematurely after 6 months but before the expiry of one year from the date of deposit, simple interest at the rate applicable to Post Office Saving Account from time to time shall be payable.
If the account is withdrawn prematurely after 1 years, the interest rate is payable for the completed years and months at 1% lower rate than a specified rate.
Also Read – 10 Best Investment to get regular monthly income
Frequently Asked Questions on Post Office Fixed Deposit –
Can I open Post Office Fixed Deposit Online?
No, you cannot open Post Office Fixed Deposit online. You have to visit post office physically to open this account. Alternatively, you can send your agent for opening this account.
How to Transfer Account from One Post Office to Other?
For transfer of account, depositor needs to apply in the prescribed form SB10(b) or using manual application. This application is required to be submitted to the post office where you are holding an account.
Can I get encashment of account before maturity?
Premature withdrawal of post office time deposit is allowed only after completion of six months. A withdrawal rule as discussed above will be applicable.
Point to ponder before opening Post office time fixed deposit –
Few important points to consider before opting for post office TD is given below.
- Premature withdrawal/closure in case of post office time deposit is allowed only after six months.
- It is a risk-free investment but, applicable interest rates are low.
- Customer care services by post office is below average or poor.
- The online option for opening fixed deposit is not available.
I hope you have got insight into Post Office Fixed Deposit Interest Rates 2018 and applicable rules. If you have any query feel free to post it in the comment section. For latest updates and information don’t forget to subscribe to my blog.