There is no maximum limit on Post Office Time Deposit (POTD) investment. Also, the investment can be increased in multiples of Rs 100. If you are looking for investment in small savings schemes, then you must read about Post Office Time Deposit Account (TD) in this article.
Post Office Time Deposit Account (POTD) is one of the most popular investment schemes offered by India Post. This scheme is available to all the people of the country. TDS is not deducted on investment in this. At the same time, the special thing is that the interest here is higher than the fixed deposits of banks. On the other hand, if you invest for five years, you can also get benefits in income tax. It can be opened both singly and jointly. Let us also tell you what are the benefits of this scheme and how one can invest in it.
How much interest is available in this post office scheme The
Ministry of Finance reviews the interest rates on this scheme at the beginning of every quarter of the financial year. The interest rate is fixed on the basis of the returns on government securities.
| account tenure | Applicable interest rate (in percent) |
| 1 year | 5.5 |
| 2 years | 5.5 |
| 3 year | 5.5 |
| 5 years | 6.7 |
If you do not want to withdraw interest annually, you can ask the post office to deposit this amount in your post office savings account, which earns an interest of 4% per annum. By the way, this rule will not be applicable to the POTD account of 1 year. Alternatively, you can invest this interest in a 5 year recurring account in the same post office or bank instead of paying 12 monthly installments. In this case the depositors will have to submit a fresh application to the office or the bank before the due date on which interest is charged for payment.
Features of the plan
- The period of deposit under the post office time deposit scheme can be 1, 2, 3 or 5 years, and only one deposit can be made in an account.
- This post office scheme promises assured return on investment of the account holder.
- This account can be transferred from one branch to another.
- This account can also be operated jointly.
- The account holder can extend the tenure or maturity period of his plan.
- There is no limit to open an account under this scheme.
- The minimum deposit amount required to invest in Post Office Time Deposit is Rs.1000.
- The amount to be deposited should be in multiples of 100 only.
What eligibility criterion
- All resident Indians can open this account singly or jointly.
- A minor of 10 years of age or more can also open and operate this account.
- Parents and guardians can also open this account in the name of their children.
- NRIs are not allowed to open POTD accounts.
- Institutions like Institutional Account Holders, Trust Funds, Regimental Funds, Welfare Funds are also not allowed to open accounts in POTD.
What are the benefits
- POTD scheme provides guaranteed return on investment.
- POTD of 5 years is eligible for tax deduction under section 80C of the Income Tax Act.
- Even minors of the age of 10 years and above can operate their account on their own.
- Nomination facility is also available.
- Account can be transferred from one branch to another branch.
- There is also the facility of premature withdrawal of the deposit amount.
- This post office scheme is considered safer than FD as the principal amount invested and the interest earned is backed by a sovereign guarantee.
Benefit is available in tax
Small savings investments in post offices do not involve any TDS at sources. It is to be noted that the interest earned on these investments is added to the total annual income of the depositors. Tax is charged as per the taxable cantilever of the investor.
What is the rule on Premature Withdrawal
This scheme of the post office allows premature withdrawal to the account holder. The only condition is that a minimum of 6 months have elapsed from the date of first deposit to be eligible for premature withdrawal. There are some rules
- If POTD of 1/2/3 or 5 years is done after completion of 6 months but before completion of 1 year from the date of opening of Time Deposit Account, then Post Office Savings Account will pay simple interest as per the rate of interest.
- If the premature withdrawal from 1/2/3 or 5 years TD account is done after 1 year from the date of account opening then the applicable interest rate will be 1% less than the interest rate for that period.
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