Post Office Fixed Deposit
The Indian Post Offices have traditionally offered avenues for investment, especially under the tax-saving schemes like National Savings Certificate (NSC), Kisan Vikas Patra (KVP), and Indira Vikas Patra (IVP). The Public Provident Fund (PPF) account is also a popular investment instrument in Post Offices. They have the largest network of offices all around the country. No bank has the amount of reach that the Post Office has. Hence, the Post Office presents the ideal opportunity to offer last-mile connectivity to every Indian citizen.
Why Post Office Fixed Deposits?
Apart from their traditional responsibilities, Post Offices offer savings banks and Fixed Deposit (FD) schemes. The post offices issue debit cards for use at ATMs. Today, the Post Office offers deposit products that are on par with those offered by banks. Besides, these post offices give the maximum rates of interest on Fixed Deposits. The high-interest rate and the Government backing ensure that the Post Office will always remain a favourite deposit destination for Indians.
Post Office Fixed Deposits - Features and Benefits
Post Office Fixed Deposits come with the following features and benefits:
- Most attractive rates of interest
- A range of deposit products are available
- The facility of opening joint accounts
- Minors aged 10 and above can open accounts
- Name deletion is possible at any time
- Monthly and quarterly interest payouts available
- Reinvestment product
- Nomination permitted
- No restriction on the number of FD accounts in a single post office
- Smooth transfer of accounts from one post office to another
- Automatic renewal facility
- Tax-saving products
Post Office Fixed Deposits - Rate of Interest
India Post offers a range of Fixed Deposits and recurring deposits. The interest rates applicable to its different products are as follows. Rates are in % per annum.
Product | Rate of Interest | Periodicity | Effective date |
National Savings Recurring Deposit |
7.20 |
Quarterly compounding |
01.07.2019 |
National Savings Time Deposit |
6.9% to 7.7% |
Calculated quarterly but payable annually |
01.07.2019 |
National Savings Monthly Income |
7.60% |
Payable monthly |
01.07.2019 |
Senior Citizen Saving Scheme |
8.60% |
Last day of every quarter |
01.07.2019 |
Public Provident Fund |
7.90% |
Compounded annually |
01.07.2019 |
National Savings Certificate |
7.90% |
Compounded annually but payable on maturity |
01.07.2019 |
Kisan Vikas Patra |
7.60% |
Compounded annually |
01.07.2019 |
Sukanya Samriddhi |
8.40% |
Yearly compounding |
01.07.2019 |
Post Office Fixed Deposits - Types of Deposits
Post Office offers the following types of Fixed Deposits:
Post Office National Savings Recurring Deposit | |
Product |
Recurring deposit account where the customer regularly saves in small instalments to build up a sizeable corpus on maturity. |
Minimum amount |
10 followed by multiples of 5 with no upper ceiling on investment |
Fixed tenure |
5 years with a facility to renew the account for another term of 5 years |
Features |
|
Post Office Time Deposit | ||||
Product |
Customers can deposit their surplus funds in this Fixed Deposit account and see their money grow. |
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Minimum deposit |
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Rate of interest |
1 year |
2 years |
3 years |
5 years |
6.9% |
6.9% |
6.9% |
7.7% |
|
Features |
|
Post Office Monthly Income Scheme | |
Product |
Deposit a lump sum amount and get monthly interest payouts while your principal amount remains secured. |
Minimum amount |
Accepted in multiples of 1,500 Maximum investment: Single accounts - 4.50 Lakhs Joint account: 9 Lakhs |
Tenure |
5 years |
Features |
Joint accounts allowed Minors aged 10 and above can open accounts Nomination permissible Smooth transfer from one post office to another Joint holders have an equal share in the amount Premature encashment allowed |
Senior Citizen Savings Scheme | |
Product |
Ideal instrument for senior citizens to earn a good income from their deposits |
Quantum of deposit |
|
Eligibility |
|
Tenure |
5 years |
Features |
|
Public Provident Fund Account | |
Product |
A traditional tax savings instrument available to customers |
Quantum of deposit |
|
Tenure |
Usually, it is for 15 years, but an extension of 5 years is permissible if the customer extends it within one year of maturity. |
Premature payment |
|
Tax benefit |
|
Loans |
Available from third financial year |
Benefit |
No attachment by court decree |
National Savings Certificate (VIII Issue) | |
Product |
Another traditional tax-saving instrument that offers high returns |
Quantum of deposit |
|
Tenure |
5 years |
Conditions |
|
Kisan Vikas Patra | |
Product |
A simplified tax-saving product where the investment doubles in 112 months |
Quantum of deposit |
|
Tenure |
112 months |
Features |
|
Sukanya Samriddhi | |
Product |
A unique product that guarantees the welfare of the girl child |
Minimum investment |
|
Eligibility |
|
Conditions |
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Documents Required for Opening Post Office Fixed Deposits
The standard KYC documents are necessary for opening Post Office Fixed Deposits:
Identification proof |
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Address proof |
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Procedure to Open Post Office Fixed Deposits
The ideal way to open a Post Office Fixed Deposit is to visit the Post Office and submit the necessary details along with the cheque for payment. Post Offices also accept cash. Under such circumstances, the office opens the FD instantly. If the payment is by cheque, the effective date of the deposit will be after the realisation of the cheque.
How Do You Open Post Office Fixed Deposit Online?
Post Office does not have facilities to open FD online.
Maturity Value Calculator
The India Post website does not have a maturity value calculator.
Premature Payment - Post Office Fixed Deposits
- Monthly Income Scheme: Early encashment within 3 years entails a penalty of 2% discount. The penalty is 1% discount if withdrawal is after completion of 3 years.
- Senior Citizens Saving Scheme: Discount on early withdrawal is 1.5% of the deposit amount after 1 year. After 2 years, the penal discount is equal to 1%. Premature payment is not permitted before completion of 1 year.
Tax Deduction at Source on Fixed Deposit Interest
The interest received on the Post Office FDs, monthly income plans, and senior citizens savings schemes is taxable. The Post Office deducts TDS if the interest income exceeds 40,000 ( 50,000 for senior citizens) in a financial year. Customers have the facility to submit Form 15G (15H for senior citizens) to ensure that the Post Offices does not deduct tax at source.
Post Office Fixed Deposits - Frequently Asked Questions
What is the frequency of payment of monthly instalments in a Post Office Recurring Deposit Account?
The customer has to deposit the monthly instalment by the 15th of every month if the account was opened in the first fortnight. Otherwise, the customer can deposit the payment by the last day of the month.
What happens if I default in the deposit of my monthly RD instalment in the Post Office account?
The Post Office allows a maximum of four normal defaults. The fourth default results in the discontinuation of the RD account. The customer can revive the account within two months by clearing the defaults and paying the instalment of the current month within two months of discontinuation. If you do not reactivate the account in this grace period, you cannot make any further deposit.
What does the penalty discount in premature encashment signify?
The discount signifies that the customer will receive the principal after accounting for the discount. It is 2% if the encashment is within three years and 1% after three years.
Are Post Office products safe?
The Post Office products are renowned for stability and safety because of the full backing of the Central Government.
What is the procedure to claim payment of a deceased certificate holder?
Post Offices allow nomination in all their accounts. In the case of a nomination in the account, the nominee can claim the money. The nominee has to submit the prescribed form and provide proper identification. If there is no record of nomination, the legal heirs can claim the amount for following a specified procedure. If the claim exceeds 1 Lakh, the claimants should produce a probate or succession certificate.
Can I apply for duplicate certificates if I have lost the original ones?
Yes, you have to apply in the prescribed format (NC29) giving details of the lost or defaced certificates. The application should accompany an indemnity bond with one or more sureties.
Is premature payment possible in an NSC?
No, premature withdrawal is not allowed in the NSC VIII Issue.
Can non-individuals open accounts in Post Offices?
No, non-individual entities cannot open accounts in Post Offices like they do in banks.
Is it necessary to have a Post Office savings account to open Post Office FD?
No, it is not mandatory to have Post Office savings account for opening Post Office FDs. The savings accounts with banks can work. However, it is advisable to have one because it makes it easy for the Post Office to credit the interest and other deposit proceeds.
Do Post Offices give loans against their Fixed Deposits?
Post Offices do not give any loan against their deposits. However, one can pledge these certificates like NSCs and others with banks and obtain loans against them.