Post Office Fixed Deposit Interest Rate - A Complete Guide

Post Office Fixed Deposit is a government-backed investment scheme that allows the customers to invest in fixed deposit accounts and earn interest on them by the end of the procedure. Post office fixed deposit interest rate is one of the Best rates for fixed deposits to be offered in India.

Post office fixed deposit schemes are similar to banks and non-banking financial company schemes from many angles. The main distinguishing point is that all the post offices provide government-supported schemes to all the citizens.

People from rural areas are more likely to opt for post office FD interest schemes than urban areas. The main reason can be the minimum amount of Rs.200 that the investor can pay at the beginning of the scheme.

If you wonder what kind of opportunities come along with the post office FD schemes and the fixed deposit rates in post offices offered in India, here is all you need to know. 

Post Office Fixed Deposit Interest Rate 2021

Like the banks and other agencies, fixed deposit interest rates in the post offices in India depend on the tenure the investor agrees to invest for. The interest rate keeps growing as long as the tenure grows. 

For the shortest periods, such as seven days or six months or one-year periods, fixed deposit rates in post office tend to be on the lower side. Here is a list of the interest rates that the post office generally offers.

Benefits of Post Office Fixed Deposit

If you are looking forward to investing in post office fixed deposit schemes, the benefits that you may expect should be considered before making the decision. Here are the significant benefits that are associated with the post office fixed deposit schemes:

• The fact that all post office fixed deposit schemes of government-backed schemes ensures the security and safety of the entire plan.
• Fixed deposit rates in post offices tend to be on the upper side of the fixed deposit schemes in India compared to other banks and non-banking agencies.
• Returns are assured or guaranteed by the post offices. It is entirely safe to invest in post office deposit schemes for this reason.
• The investor tends to earn more whenever the inflation rate dips below the term deposit interest rate.
• No matter when and how the market fluctuations take place assured money guarantee and your promised interest rate can be expected from these schemes.

Features of Post Office Fixed Deposit

Some of the significant features you should keep in mind before investing in post office fixed deposit schemes are mentioned below.

• The tenures are flexible for the investors to choose before investing in post office fixed deposit schemes. Seven days are the minimum limit that one can opt for. The 10 year period can go up to 5 years.
• Interest rates in post office fixed deposit schemes depend on the tenure that the depositor selects before investing.
• Investment can be made both by cash and cheque.
• Another significant benefit of the post office fixed deposit scheme is that premature withdrawal is allowed for the investors after six months are over from the date of the first investment.
• A nomination facility is also available for the post office fixed deposit schemes. If an investor chooses someone else to withdraw the money from their account, it is hassle-free as far as post office fixed deposit schemes are concerned.
• Absolutely anyone can manage the schemes once they are over 10 years of age. However, they will have to convert their accounts in their name once they cross 18 years.

Taxation on Post Office Fixed Deposit Interest Rate

The significant advantage noticed in post office fixed deposit programs is that no TDS is deducted from the interest rate that the post office offers. This is the major difference that makes these schemes different from the banks fixed deposit schemes.

This is the primary reason why more people tend to invest in post office fixed deposit schemes these days. Post office fixed deposit interest rate remains unchanged by any tax deduction of any means during the scheme. The low-income group can benefit the most from these schemes considering they do not have to pay a certain amount of tax from their interest rates every year.

Who Should Invest in Post Office FD?

Post office fixed deposit schemes are more likely to suit the demands and requirements of people belonging to the low-income group. The fact that no tax deduction takes place from the interest rate they opt for makes it a feasible option for them to invest in.

Children who cross 10 years are often encouraged by their parents to invest in these schemes. The habit of investing makes them prepared for their future investments in a good way.

People from rural areas are more likely to invest in these schemes majorly for two reasons- no tax deduction on interest rates and low investment rates.

Nonetheless, people from all classes, backgrounds, professions, and statuses are encouraged to apply and invest in the post office fixed deposit scheme considering how it offers the best interest rates in the market and that no tax deduction takes place during the scheme.

Eligibility Criteria

You need to consider the eligibility criteria applied for these schemes if you consider investing in a post office FD scheme shortly.

• You have to be a resident of India to make investments in the government-backed post office FD schemes.
• Single adults are allowed to make investments in the post office fixed deposit accounts individually. They can also make investments jointly.
• Minors at least 10 years old are allowed to manage post-office FD accounts. However, the account remains under the name of their legal guardian until they turn 18.
• Legal guardians are allowed to manage accounts of their children who are 10 years or more. Parents of autistic children and the like are also entitled to manage and invest in India's post office FD schemes.
• If you run a company, you can invest in a post office FD scheme in India.
• Trusts, NRIs and other organizations are also allowed to invest in these schemes across the country.

Documents Required

Take a look at the important documents you will need before investing in a post office FD scheme in India.

• To provide your address proof, you will be asked to submit valid electricity bills, telephone bills, government-supported IT or any certificate issued by the post office, passport, other bank statements, including cheques.
• Identity proof is a must for applying and investing in any fixed deposit scheme in India. To provide identity proof, he will be asked to provide the officials with your PAN card details, voter ID card, driving license, Aadhaar card, and passport.
• Your recent passport-sized photos are mandatory venues to open an FD account in any bank or post office in India.
• The nominee’s details must be provided by your end to the post office before you start the scheme.
• Verified KYC documentation and an active DOP (Department of Post) or debit card details must be provided to the post office.

These are the major documents that have to be provided by you when you apply for a post office fixed deposit account in India.

Post Office Fixed Deposit Calculator

No matter where you are based in India, it is always advised to calculate the interest rate in total before investing in any scheme. If you aim to invest in a post office fixed deposit scheme in India, use the post office fixed deposit calculator to calculate the total interest rate offered to you before investing. This will give you an entire picture of what amount of money you can expect by the end of the scheme.

For instance, to calculate a post office fixed deposit interest rate, you can go for an FD calculator to calculate the total amount of interest you will receive after the scheme gets over.

To calculate your total interest rate, you have to put the primary amount that you deposited, the current post office FD interest rates that are being offered by the post office, along with the tenure you are selecting. Calculating the interest rate helps you avoid any confusion during the entire process.

Post Office Fixed Deposit Premature Withdrawal

Premature withdrawal refers to when someone decides to withdraw their money before the maturity of the scheme. If you intend to withdraw your funds before the scheme's maturity, it is vital to note that only after six months from the first investment will you be allowed to do so if you invested in post offices.

As far as the post office fixed deposit interest rate is concerned, if you decide to withdraw your funds before the maturity of the scheme, a penalty is more likely to be charged if you withdraw the money from six months to 12 months from the date of account opening. To avoid such penalties, make sure you withdraw after 12 months of opening your account

FAQs

✅What do I need to open a fixed deposit account online?

Ans: In order to open a fixed deposit account online, you need to have an active valid savings account, verified KYC documents, PAN card details, valid email ID and mobile number.

✅What is the easiest way to open an FD account in a post office?

Ans: Visit your nearest post office along with all the necessary documents, including your identity proof details, salary information, and other details.

✅How much tax do I need to pay if I invest in post office FD schemes?

Ans: No tax deduction takes place when you invest in post office Fd schemes.

✅Can I take a loan against the post office FD?

Ans: This facility is still not available in post offices in India.

✅What is the highest post office interest rate that is offered in India?

Ans: The highest FD rate that post offices in India offer remain around 6.70% for a tenure of 5 years.