Table of Contents
- Blog Introduction
- What is Post Office Time Deposit ?
- How Does Post Office Time Deposit Work?
- Features of Post Office Time Deposit
- Who Can Open The Account?
- How Do You Open The Account?
- Deposit Limits of Post Office Time Deposit
- Term of Post Office Time Deposit
- Interest rate % of Post Office Time Deposit.
- Compounding Frequency of POTD
- Auto-Renewal Facility of POTD
- Pre-Mature Closure of POTD
- Account Conversions of POTD
- Income Tax Benefits of POTD
- Post Office Time Deposit vs Bank Fixed Deposits
- POTD Returns Projection Table
- FAQ About Post Office Time Deposit
Hello Friends, Welcome to my Blog Investinfy.com the best financial blogs where you will be able to read about the end to end information on many investment schemes and financial topics. In this Blog post we will be focusing on Post Office Time Deposit investment scheme.
Generally when we want to invest money on any investment scheme , we always asks our friends and relatives that where we can invest ? and they suggests the investment schemes which they like most. Then we invest as per their suggestions, that is good as we consider them as our well wisher , But here I want to mention one thing, if we know end to end information of each investment schemes at least it will help us to understand if that investment scheme is good for us or not.
Hence it is better to have a complete idea about each investment scheme where we invest. Therefor this blog will help you to know end to end information of many Indian investment schemes available right Infront of you.
In this blog post I will be explaining my analysis on Post Office Time Deposit investment scheme. This will be a complete guide on Post Office Time Deposit investment scheme. Please read till end of the blog post to know the complete information about this Post Office Time Deposit investment scheme. Lets get started.
What is Post Office Time Deposit ?
POTD or Post office Time deposit is type of fixed deposit or term deposit account. In this scheme the interest is paid annually.
How Does Post Office Time Deposit Work?
- You need to deposit a lump sum amount for specific tenure.
- You will receive interest every year till the end of the tenure.
- At the end of the tenure, you will get your deposit amount back.
Features of Post Office Time Deposit
- This scheme is backed by the Government of India.
- This is very safe investment option.
- This scheme gives you a guaranteed returns.
Who Can Open The Account?
- Only Indian residents can open the TD account.
- TD account can be opened by.
- An adult for himself.
- An adult on behalf of a minor or a person of unsound mind of whom he is the guardian.
- A minor who has reached the age of 10 years.
- Joint account by up to 3 adults.
- You can open more than one account in your name or jointly with another person.
How Do You Open The Account?
- You can open the account by cash or cheque.
- In case of cheque, the date of realisation of cheque in the account will be the date of account opening.
- Any number of accounts can be opened in any Post Office.
Deposit Limits of Post Office Time Deposit
- Minimum deposit amount is Rs. 1,000.
- No maximum limit for deposit.
- Deposit amount should be in multiples of Rs. 100.
Term of Post Office Time Deposit
You can choose one of the following 4 options.
- 1 year.
- 2 years.
- 3 years.
- 5 years
Interest rate % of Post Office Time Deposit.
The current annual interest rate for various tenure are given below.
- 1 year 5.50%
- 2 years 5.50%
- 3 years 5.50%
- 5 years 6.70%
Interest is paid on an yearly basis. Interest rate (on the day of account opening) will remain the same throughout the tenure of Time Deposit. It will not change even if there are changes to the interest rate thereafter. From 01-Apr-2016, the interest rates of this scheme have been announced on a quarterly basis.
Compounding Frequency of POTD
Quarterly compounding frequency is followed in this scheme. But, interest amount will be paid to you on a yearly basis.
Auto-Renewal Facility of POTD
- In CBS (Core Banking Solution) Post Offices, when the TD account is matured, it will be automatically renewed for the period for which it was initially opened.
- For example, 2 Years TD account will be automatically renewed for 2 Years. 1 year TD account will be automatically renewed for 1 year.
- Interest rate for the auto renewed TD account will be the interest rate on the day of maturity.
Pre-Mature Closure of POTD
If the TD account is closed before 1 year, then the Savings Bank (SB) account interest rate will be paid for the duration for which TD account was kept.
Account Conversions of POTD
- Single account can be converted into joint account and vice versa.
- Minor, after attaining majority, has to apply for conversion of the account in his name.
Income Tax Benefits of POTD
The investment on 5 year Time Deposit qualifies for the benefit of section 80C of Income Tax Act, 1961.
Post Office Time Deposit vs Bank Fixed Deposits
|Particulars||Post Office Time Deposit||Bank Fixed Deposit|
|Rate Of Interest||5.5% to 6.7%||5.5% to 6.5% (Average)|
|Additional Interest for Senior citizens||No||0.25% to 0.50%|
|Interest Payment Frequency||Yearly||Monthly, Quarterly, Yearly|
|Lock-in Period||1 to 5 Years||7 days to 10 Years|
|Auto renewal||Only after prior application or in case post offices with core banking solutions||Yes|
|Loan Against The Deposit||NA||Available from some banks|
|Premature Withdrawal||After 6 Months||Available anytime with certain financial institutions.|
|Applicability of Tax Deducted at source (TDS)||No||Yes|
POTD Returns Projection Table
|Amount In INR||Maturity after 1 year||Maturity after 2 Years||Maturity after 3 Years||Maturity after 5 Years|
FAQ About Post Office Time Deposit
What happens to my Post Office Time Deposit account if I have to move from one city to another due to work?
POTD Account can be transferred from one Post Office to another Post Office.
Is there any Nomination Facility Available for Post Office Time Deposit?
Nomination facility is available. You can nominate either at the time of account opening or after opening the account (but before maturity).
Can NRI and HUF Open This Post Office Time Deposit Account?
NRI (Non Resident Indians) and HUF (Hindu Undivided Family) can not open the account.
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