Indian Postal Department is also known as India Post which provides its customers with Fixed Deposit options to park their surplus money and earn interest on it. The Post Office FD interest rates are one of the best rates for fixed deposits offered in India. Interest in post office FD is paid annually whereas these are compounded quarterly under this scheme. The frequency of people opting for post office fixed deposits is more in rural areas as compared to bank deposit schemes. The minimum deposit to be made is as low as Rs. 200 whereas there is no maximum limit under this scheme. However, the deposits made between these limits should be in multiples of Rs. 200 only.
In this article
- Post Office FD Interest Rates
- Post office Fixed Deposit Rates
- Benefits of Opening a Post Office Fixed Deposit Account
- How to Open Post Office FD?
- Post Office FD Interest Rates – FAQs
Post Office FD Interest Rates
(Last Updated 7th Jan 2021)
|Tenure||FD Interest Rates for General Citizens||FD Interest Rates for Senior Citizens|
|7 days to 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%|
Post office Fixed Deposit Rates
- The post office fixed deposits’ tenure range from 1 year to 5 years
- Depositors can open multiple FD accounts in any of the post offices
- Minors of 10 years of age or more can also open and manage these accounts as well
- Minors, however, will have to apply to convert the account in their name once they hit 18 years
- The minimum deposit amount needed to open a post office FD is Rs. 200
- There is no cap on the maximum deposit amount
- Joint account can also be opened by individuals, given that the account holders are two adults
- Depositors can convert these accounts from single to joint and vice versa as per the need
- Deposits made for a tenure of 5 years are eligible for tax benefits under section 80C of the Income Tax Act of India, 1961
- Post Office fixed deposits can be easily transferred from one post office to another
- The account gets renewed automatically upon maturity for the same period as it was opened previously. However, the interest rate will be applicable as the day of maturity.
- NRI depositors cannot open a fixed deposit account in Indian Post office
- Nomination can be done at the time of opening the account. However, one can nominate even after opening the account
- The account can be opened with both cash and cheque. If a depositor opts for a cheque deposit, the date of payment of the cheque in the account of the government should be the date of opening the FD account.
Benefits of Opening a Post Office Fixed Deposit Account
In India, there is a number of fixed deposit schemes offered by various public and private sector banks but still, a majority of people prefer to go with Post office fixed deposits over them owing to these reasons:
Higher rate of interest: Post office FD interest rates are comparatively higher than the what market has to offer. Currently, the rate of interest ranges from 6.9% to 7.3%
Assured Returns: Post office deposits are backed by the government of India and are thus completely safe to invest and ensures guaranteed returns on the investment.
Liquidity: Like banks, post offices also have a deposit lock-in period. However, deposits can be withdrawn prematurely in case of any emergency.
Inflation Protection: Whenever the inflation rate dips below the term deposit interest rate, the depositor earns more
Risk-free: Post office fixed deposit is totally risk-free investment as no matter what the market condition is, you will get complete returns on maturity.
Tax Implications: Depositors can claim up the tax to a maximum of Rs. 1,50,000 under Section 80C of the IT Act, 1961 if invested in 5-year term deposits.
Post Office FD Calculator
One can check the interest they can earn on their post office FD by using an online post office FD calculator. The exact maturity value of an FD can be calculated by providing the basic details pertaining to your FD such as amount invested, interest rate, tenure and type of interest compounding.
Premature Withdrawal of Post Office FD
Withdrawal of funds before the maturity is referred to as premature withdrawal of post office fixed deposit. Certain important points related to post office FD premature withdrawal have been enlisted below:
Premature withdrawal is allowed only after 6 months from the date of opening the account
If the withdrawal is made between the period of 6 to 12 months from the date of account opening, a penalty will be charged in the form of simple interest that is for a specified period of time.
TDS Implication on TDS FD
One of the major advantages of opening an FD account in the post office is that TDS (Tax Deducted at Source) is not deducted on the interest earned. This is because post office FD is designed to benefit the low-income group and they are exempted from any tax liability by the government.
Also, while filing income Tax Return (ITR), one can add their FD investments in the post office to claim deduction under section 80C of the Income Tax Act, 1961.
How to Open Post Office FD?
Customers can either opt for online or offline mode to open a post office account in India. Let’s look at both the modes separately”
Under online mode, the account opening facility is available online via Intra Operable Netbanking/Mobile Banking. Indian Post has been providing access to post office net banking services to its customers since 2018, under which funds can be transferred easily within varied post offices.
To open a post office account online, one must have the following:
- A valid active savings account
- PAN Card
- Verified KYC documentation
- Active DOP (Department of Post) ATM or debit card
- A valid mobile number and email id
Steps to Open Post Office FD Online
Step 1: Visit the official website of Indian post and log in to post office e-banking using registered email id and password. In case you are a new user, click the ‘New User Activation’ option.
Step 2: Click on General Services
Step 3: Find the Service request and open the same.
Step 4: Make the time deposit (TD) opening request using ‘New Request’ option
Follow the next appearing steps to complete the process.
Following points must be taken into consideration while opening a fixed deposit account offline:
- Visit any nearby post office branch of India Post with all the required documents
- Enquire with an official about opening the FD in a post office
- Get details about the current post office FD rates
- After getting a post office FD account, make sure to take the receipt for future references
Post Office FD Interest Rates – FAQs
What is the highest interest rate Post office fixed deposit offers?
Currently, the highest interest rate offered by post office fixed deposit is 7.70% for 5 years’ tenure.
What is the minimum deposit required to open a post office fixed deposit account?
The minimum amount required to open a Post office FD account is Rs. 1000.
What are the documents needed to open a fixed deposit account in a post office?
You should have the following documents to open a post office fixed deposit account:
- Photo ID Proof that includes Aadhaar Card, Voter ID Card, etc.
- Address Proof that includes Electricity Bill, Water Bill, Ration Card, Aadhar Card, etc.
- PAN Card
- Passport size photographs (2 or more)
Can we take a loan against Post Office FD?
No, this facility is not available in post offices to date.