post office fixed deposit Also known as Post Office Fixed Deposit (POFD). it is similar to Fixed Deposit (FD) Bank facilities. This scheme is offered by India Post. This scheme provides guaranteed returns to the depositor on depositing the amount for a specified period.
POTD Account Opening
POTD accounts can be opened by any person who is a citizen of India. The account can be opened by cash or cheque. The date of receipt of the check is recorded as the date of opening of the account.
The minimum amount required to open such an account is Rs. 1,000. There is no limit on the maximum amount that can be deposited. The account can also be opened jointly by a maximum of three persons. One person can create multiple accounts without any restrictions. He has the freedom to transfer his account from one post office to another within India.
lock-in period
One can lock his money for a period of one, two, three or five years. The tenure can also be extended by sending a formal application to the post office.
Rate of interest
The interest rate under this scheme is revised regularly. It is calculated on a quarterly basis and paid on an annual basis. The latest revised rates for POTD as on Q2 of FY 2021-22 are as follows:
1 year = 5.5%
2 years = 5.5%
3 years = 5.5%
5 years = 6.7%
Tax exemption
Depositors can also claim income tax exemption of Rs. 1.5 lakh under section 80C of the Income Tax Act, 1961. However, these exemptions are available only for a lock-in period of five years.
Withdrawals before maturity
The depositor is not allowed to withdraw money within six months of the deposit. If the amount is prematurely withdrawn between six months and 12 months, the interest rate offered will be the rate prescribed for the savings account.
Post-office fixed deposits are best suited for those who do not have high risk appetite.
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