Post Office Time Deposit

Post Office Time Deposit (POTD) is the Fixed income scheme introduced by the Post Office. This is the same as that of the Fixed Deposit. As the scheme is under the involvement of the Indian government, it is a risk-free scheme. A person who needs to make a safe investment can avail of this. There are four types of tenure with a minimum investment of Rs.1000 and the maximum investment can be multiples of Rs.100.

Let us know the details such as benefits, premature closure, reinvestment, tenure, eligibility, interest rate, taxes, minimum and maximum investment furthermore in this article

Post Office Time Deposit Features:

1. Objective

• This scheme is mainly for people expecting a guaranteed return with a minimum risk.
• Thus, it is an alternative to the Post Office Fixed Deposit.
• A time deposit for 5 years is eligible for tax benefits.

2. Eligibility

• Indian citizens.
• Single or joint account holders, Minors above the age of 10 years, and Minors below the age of 10 years with the help of guardians/parents.
• Also, it does not allow NRIs (Non-Resident Indians) and HUFs (Hindu Undivided Families).

3. Minimum and Maximum investment

• Minimum Investment: Rs.1,000
• Maximum Investment: Certainly, there is No limitation.

4. Tenure option

• There are four types of tenure schemes: 1 Year, 2 Years, 3 Years, and 5 Years.
• Certainly, Investors based on their investment needs can decide tenure scheme.

5. Interest Rate

• The Indian government will modify the interest rate for each quarter, but the interest rate will be fixed once the scheme is started.
• Current interest rate:
  • 1 Year scheme: 6.9% yearly
  • 2 Years scheme: 7.0% yearly
  • 3 Years scheme: 7.0% yearly
  • 5 Years scheme: 7.5% yearly
• Interest will be payable yearly but calculated quarterly.

6. Payment of Interest

• The interest payment is credited annually.
• Finally, After the scheme maturity, the amount can be reinvested or withdrawn.

7. Premature withdrawal

• Premature closure is not possible before attaining the 6 months from the date of opening account.
• Submit the application form along with the passbook for premature closure of the TD Account to a concerned Post office.

Based on the tenure of the time deposit, the rules for premature withdrawal vary.

Before 6 month:

• Premature closure before attaining 6 months, no interest shall be payable.
• Will return only the deposit amount.

After 6 months, before the end of scheme:

• After the 6 months but before end of the scheme, the interest shall be payable
• Also, 1% of the interest will be deducted as a penalty for premature closure.

For instance, investment is made for 3 Years but closed after 1 Year. The interest rate will be reduced by 1% of the interest rate as a penalty.

8. Tax benefits

• Tax exemption: Only a 5-year time deposit is eligible for tax exemption under 80C.
• Tax: Also, Interest is taxable.
• TDS (Tax Deduction at Source): No TDS for the interest.

9. Nomination

• Allow to assign nominees at the start or during the deposit period.

10. Transfer

• Allows the transfer of the account from one to any other post office.

11. Extension of Account

• Extension of the time deposit account is possible after the maturity.
• Hence, submit the application form along with the passbook for extending the TD Account to a concerned Post office.

For example, if made 3 years of investment, after the maturity again the 3 years of investment is possible.

12. Reinvestment

• After the maturity, the account holder can change the tenure of the time deposit for the reinvestment.

For example, if the time deposit account is for 1 year. Now after the maturity, you can change it to 2 to 5 year scheme

13. Maturity

The deposit is repaid after completion of the tenure period such as 1 year, 2 years, 3 years, and 5 years from the date of opening the account.

How to Apply?

Post Office Time Deposit Offline:

• Visit the nearest Post office, and get the application form for POTD.
• Secondly, fill out the form and attach the required documents along with the form.
• Then, Pay the deposit amount using a cheque, cash, or transfer from the account.
• Finally, the postmaster will verify the form and give the acknowledgment for the time deposit

Post Office Time Deposit Online:

• Firstly, visit the official Internet Banking website of Post office and log in using the credentials.
• Search the section for Time Deposit Scheme
• Fill out the form and select the tenure (1, 2, 3, or 5 Years)
• Finally, enter the deposit amount and pay the deposit amount online.
• Thus, the time deposit scheme is verified and opened. Registered mobile number or Email will get the notification.

Documents Needed:

• Identity Proof such as Aadhar Card, Voter card.
• Address proof.
• Passport size photograph.

Key features:

• Safe: It is risk-free, because of the indulgence of the Indian Government.
• Flexible Tenure: It has four types of tenure. Also, Customer can select based on their needs.
• Tax exemption: Deposit for 5 years of tenure has the tax exemption under 80C.

Post Office Time Deposit is a safe and secure scheme for long-term investors as it is governed by the Indian Government.

Read more Post Office National Savings Certificate