Post Office Time Deposit Interest Rates
Post office time deposits offer 6.6% interest on 1 year FD, for 2 year and 3 year, POTD offers 6.8 and 6.9% respectively. For 5-year term deposits, it offers an interest rate of 7%.
Note that the interest rates on Post Office small savings schemes are revised every quarter. The above rates are applicable from January 1, 2023 to March 31, 2023 quarter. Interest rate is payable annually, no additional interest will be payable on the amount of interest that has become due for payment but not withdrawn by the account holder.
Also read: Tax-saving FD: These banks are offering the highest interest rates on tax-saving fixed deposits
POTD interest rates
| Interest rates From 01.01.2023 to 31.03.2023 | |
| Period | Rate |
| 1yr.A/c | 6.60% |
| 2yr.A/c | 6.80% |
| 3yr.A/c | 6.9% |
| 5yr.A/c | 7.0 % |
Source: India Post website
Tax benefit of 80C
Section 80C enables taxpayers to lower their taxable income by making investments that save them money on taxes or by incurring certain expenses that qualify. It permits an annual deduction from the taxpayer’s gross income of up to Rs 1.5 lakh. Individuals investing in 5 year Post office time deposits are eligible for tax benefit. Note that tax benefit is available only if the deposit is held till the end of the tenure i,e 5 years.
Premature closure of Account
No deposit shall be withdrawn before the expiry of six months from the date of deposit. According to the India Post website, “If 2/3/5 year TD account prematurely closed after 1 year, interest shall be calculated 2 % less than of TD interest rate (i.e. 1/2/3 years) for completed years, and for part period less than a year, PO Savings Interest rates will be applicable.”
If a five-year time deposit account is closed after four years from the date of deposit, the rate applicable to a three-year time deposit account is used to calculate interest.
POTD investment limit
The minimum investment amount is Rs 1000 in multiples of 100. Yet, there is no upper limit. However, the highest deduction available under section 80C for the current fiscal year is Rs 1.5 lakh.
The amount of interest that has been due for payment but has not yet been withdrawn by the account holder is not subject to further interest. Interest is payable annually.
Extension of time deposit (TD)
Depositors have the option to extend their TD accounts after they reach their stated maturities for further terms. Within the time frame specified after the date of maturity, TD accounts can be extended. The interest rate that was in effect for each TD account on the day of maturity will continue to be in effect for the extended term.
Senior citizens interest rates
Post office time deposit does not offer any higher interest rate to senior citizens, unlike banks which offer 0.50% to 0.75% to senior citizens customers investing in fixed deposits.