Post Office Time Deposit Scheme

Post Office Time Deposit Scheme is a scheme offered by the department of Post, Government of India. This is a type of fixed deposit and is offered at all post offices. As this scheme is handled directly by the Government of India through Post Office network, it can be considered a very safe and secure method of investment. The amount grows at a predetermined rate at no risk.

This scheme is best for those people who want to invest their lump-sum money for a fixed period of time. At the maturity of the deposit, the depositor gets the total amount, (principal + interest). The rate of interest on investment is high in this scheme ranging from 6.25% to 7.50%, depending on the term of the deposit. The interest is calculated on quarterly basis but is payable annually.

The various rates of interest received in a Post Office Time Deposit are:

Opening a Post Office Time Deposit Account

The account can be opened at any of the post offices across India. It can be opened for a period of 1 year, 2 years, 3 years or 5 years. On opening the account, you will receive an account statement with the deposit amount details and duration of the account. Once the account matures, the depositor receives the total amount.

The minimum amount required to be deposited in the Post Office Time Deposit is Rs. 200/- and multiples of it. There is no maximum limit. Nomination facility is available under this scheme. The following persons can open a Post Office Time Deposit Account:

• A single person can open this account.
• Two adults can open a joint account.
• An adult can open an account on behalf of a minor or a person of unsound mind.
• Authority of Provident Fund, Superannuation Fund or Gratuity Fund can open group accounts.
• Fund controlling authority of Sanchayika can open an account.
• Local authority can open a public account
• The Treasurer of Charitable Endowments for India, Trust, Regimental Fund & Welfare Fund could open institutional accounts
• A cooperative society/bank or scheduled bank can open an account on behalf of its members, employees or clients.
• Gazetted officer can open an account in his official capacity.

Withdrawal

No withdrawal is permitted for 6 months after the deposit. In case the depositor closes the account after 6 months, but before 1 year, then he will get back the principal amount without any interest. However, in some cases, some interest could be received depending upon the time when it was deposited. In case the duration of deposit is 2, 3 or 5 years and the depositor closes the account after 1 year, then the depositor will get 2% less than the interest rate applicable to the period for which the deposit was initially made.

Tax Benefits

The interest received on a Post Office Time Deposit is tax-free under section 80L of the Income Tax Act. Also, the amount invested in a 5-year Post Office Time Deposit Account is eligible for deduction under section 80C of the Income Tax Act. The investment in Post Office Time Deposit along with other investments under Public Provident Fund, LIC, National Savings Certificate, ULIP etc are eligible for deduction up to a maximum of Rs. 1,00,000/- under section 80C. In case of joint account under this deposit, the deduction is allowed to the first holder.