Post Office Fixed Deposit: Interest Rates, Features and Tax Benefits

Post Office Deposit – Post offices offer several saving schemes across different time periods with different interest rates. One such saving scheme offered by India Post is time deposit or fixed deposit. The Post Office Time Deposit (POTD) is similar to Bank Fixed Deposits (FDs), also known as term deposits.

The post office fixed deposit (POFD), also known as ‘post office time deposit’ is a convenient alternative to the fixed deposits provided by banks. Through this fixed deposit scheme that is offered by the Indian Postal Services, an individual can earn a guaranteed return on the money deposited for a fixed period of time.

Tax Benefit for Senior Citizens:

Do note that with effect from 1 April 2018, any interest received by senior citizens from deposits in Post Office would be tax exempt up to Rs 50,000 under Section 80TTB.

Interest Rates in Post Office Fixed Deposit (Effective 1st July 2019):

  • 1 Year – 6.9%
  • 2 Years – 6.9%
  • 3 Years – 6.9%
  • 5 Years – 7.7%

Post Office Fixed Deposit: Things to know

  • Post Office Fixed Deposits account can be opened by an individual by cash or cheque. In case of a cheque, the date of realisation of cheque in government’s account shall be the date of opening of the account.
  • The minimum amount required to open Post Office FD account is 200 and in multiples thereof. However, there is no maximum limit.
  • Investments made under the 5-year fixed deposit account qualifies for income tax benefits under Section 80C of the Income Tax Act. However, there is no tax benefit on the deposits with less than five-year tenure.
  •  At the end of the post office time deposit’s tenure, the deposited amount with interest earned on the income is taxable.
  • The money in these Post Office deposits is completely protected, with guaranteed returns, as the scheme is backed by the government.
  • Nomination facility is available at the time of opening and also after opening of an account.
  • The Post Office Deposit account can be opened in the name of a minor and a joint account can be opened by two adults.
  • Portability of the account between post offices is possible.

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