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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
  • Account opening by cash or cheque
  • Nomination allowed
  • Transfer from one post office to another permissible
  • No restriction on the number of accounts
  • Minor aged 10 and above can open this account
  • Joint account facility permitted
  • Penalty for delayed instalment is 0.05 for every 5
  • Rebate if customer deposits advance deposit of a minimum of 6instalments
  • One partial withdrawal up to 50% of the balance allowed after 1 year
Post Office Time Deposit

Product

Customers can deposit their surplus funds in this Fixed Deposit account and see their money grow.

Minimum deposit
  • The minimum investment is 200
  • No maximum limit

Rate of interest

1 year

2 years

3 years

5 years

6.9%

6.9%

6.9%

7.7%

Features
  • Individuals can open accounts singly and jointly
  • Minor above 10 years of age are eligible to open an FD account
  • Nomination facility is available
  • Transferability is possible
  • Can open multiple accounts in a post office
  • Name addition and deletion allowed
  • Automatic renewal for the same tenure
  • Deposit for 5 year period qualifies for concession under Sec 80C of the IT Act
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
  • The maximum amount is 15 Lakhs
  • Only one deposit permitted in multiples of 1,000

Eligibility
  • Senior citizens aged 60 and above are eligible
  • Individuals aged 55 and above are qualified under exceptional circumstances. They should have attained superannuation or taken VRS. Deposit should be within 1 month of receiving retirement benefits. The maximum deposit should not be more than the total retirement benefits.

Tenure

5 years

Features
  • The regular features of Post Office Fixed Deposits apply to this account, as well
  • Account opening in cash permitted up to 1 Lakh
  • Interest is payable to the depositor on the first working day of the new quarter in April, July, October, and January.
  • Premature closure allowed
  • TDS applicable as per rules
  • Investment in this product qualifies for concession under Sec 80C of the IT Act
Public Provident Fund Account

Product

A traditional tax savings instrument available to customers

Quantum of deposit
  • Minimum: 500
  • Maximum: 1.50 Lakhs in a financial year
  • Flexibility to pay the amount in a lump sum or 12 instalments

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
  • Not allowed before 15 years
  • Part withdrawal is permitted from the seventh financial year

Tax benefit
  • Deposits qualify for concession under Sec 80C
  • Interest income is tax-free

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
  • The minimum amount is 100 and in multiples of 100
  • There is no maximum limit

Tenure

5 years

Conditions
  • Only individuals can purchase the single holder type certificate
  • The purchase is in the individual name or on behalf of the minor
  • All NSC certificate investments qualify for rebate under Sec 80C of IT Act
  • Interest is deemed to be reinvested under Sec 80C
  • Transfer of certificates possible once during its tenure
Kisan Vikas Patra

Product

A simplified tax-saving product where the investment doubles in 112 months

Quantum of deposit
  • The minimum investment is 1,000 and in multiples of 1,000
  • There is no maximum ceiling on the investment

Tenure

112 months

Features
  • Single and Joint holding allowed
  • Nomination facility available
  • Transfer from one office to another is possible
  • Early encashment allowed after two and a half years from its issuance
Sukanya Samriddhi

Product

A unique product that guarantees the welfare of the girl child

Minimum investment
  • 1,000 with the maximum investment up to 1.50 Lakhs in a financial year.
  • Subsequent deposits are allowed in multiples of 100 or a lump sum
  • No restriction on the number of deposits in a month or a fiscal year

Eligibility
  • Natural/ Legal guardian in the name of the girl child
  • Only 1 account in the girl's name with a maximum of 2 in the names of 2 female children.

Conditions
  • Eligible to open an account only until the girl reaches 10 years of age
  • Minimum deposit in a financial year is 1,000. Otherwise, the account gets discontinued and attracts a penalty of 50 per year.
  • Partial withdrawal allowed up to 50% of the balance after the girl attains 18 years of age.
  • No closure permitted until the girl reaches 21 years
  • Closure or premature encashment is allowed after completion of 18 years of age provided the girl is married.

Documents Required for Opening Post Office Fixed Deposits

The standard KYC documents are necessary for opening Post Office Fixed Deposits:

Identification proof
  • Voter ID card
  • Ration card with photograph
  • Passport
  • Driving License
  • Post Office ID Card
  • Job Card under MG-NREGA
  • Photo ID issued by school/college/university
  • UIDAI Letter containing the name, address, and Aadhar number

Address proof
  • Bank of Post Office Passbook with address
  • Passport
  • Ration card with current address
  • Recent Utility bill
  • Salary slip of reputed employer with current address
  • Certificate from any Public Authority
  • UIDAI Letter

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. 

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