Post Office Fixed Deposit Rates

Fixed deposit rates in Post Office are regularly updated by the Government of India under Small Savings Schemes. The following are updated Post office FD interest rates:

Note: The above stated FD rates effective for the period of 1st April 2020 to 31st December 2020. 

Refer to the table below to know the important details of time deposits by the India Post under its Savings Scheme:s

*If account is closed between 6 to 12 months from the date of opening, then Post Office Savings A/c rates will be applicable.

For conservative investors, parking their savings in the post office fixed deposit is a highly preferred choice. The following are benefits of investing in a Post Office Time Deposit (POTD) Account:

• Guaranteed by the Government of India, thus investors enjoy the highest level of security
• Since it is a non-profit-making organization, the main focus is social welfare and this is the USP of POTD (Post Office Time Deposits)
• An account can be opened offline as well as online via Post Office Netbanking
• Tax (TDS) is not charged on the interest earned
• Deposit made for 5 years qualify for tax deductions from gross salary when filing ITR (u/s 80C for up to Rs. 1.5 lakh/FY)
• The deposit can be made individually or jointly (up to 3 members)
• Easy transfer from one post office to another
• Minors can open the time deposit account under valid guardianship
• More than one fixed deposit account can be opened in any post office
• One can add nominee even after opening the account

Post Office fixed/time deposit scheme is well-suited for those who belong to the low-middle income group. Housewives should also direct their savings towards this scheme since TDS (Tax Deducted at Source) is not applicable to the investments made in Post Office FD.

If you have children above the age of 10 years, you should encourage them towards investing in this scheme. This would help inculcate the habit of saving which would prove beneficial in future.

Since the scheme is brought by India Post, which is a wholly-owned venture by the Government of India, safety of your money is prime.

All being said, you should expect modest returns and retain for good 3-5 years to reap the maximum benefits.

Read more: Investments in Post Office 

Before finalizing on making a term deposit with Post Office, it is advised to use the Post Office FD Calculator. One can use the Paisabazaar FD Calculator free of cost to determine the interest he/she may earn through the entire tenure at the applicable post office fixed deposit rates.

The tool requires deposit amount, tenure (in months or years) and the current Post office fixed deposit interest rate for the chosen tenure.

Once the details are entered, hit the calculate button to obtain the estimated interest earned as well as maturity amount, separately.

One major advantage of investing in Post Office fixed/time deposit is that tax (TDS*) is not deducted on the interest earned. This is because it is designed to especially benefit the low-income group and tax liability is taken away from their shoulders by the government.

When filing Income Tax Return (ITR), one can add their investments of fixed deposit in Post Office to claim deduction u/s 80C of the Income Tax Act, 1961. The upper limit for deductions under the said section of the IT Act, 1961 is maxed at Rs. 1.5 lakh, every financial year.

*TDS: Tax Deducted at Source

Premature withdrawals refer to the withdrawal of funds from the account before the FD matures i.e. prematurely. Important points regarding the premature withdrawal of Post Office fixed deposit are stated here:

• Premature withdrawal is allowed after 6 months from the date of account opening
• If one withdraws between the period of 6 – 12 months from the date of opening, interest will be payable as per the Post Office Saving Account interest rates

Apart from giving guaranteed returns, fixed deposit account can also be used to get a credit card against. Such credit cards are called as secured credit cards since they are backed by the FD. However, for now, credit cards against fixed deposits are only offered by banks.

You can get a credit card by investing as little as Rs. 12,000 in a fixed deposit and enjoy rewards on spends while earning guaranteed interest on the FD. This card, Paisabazaar Step Up, is currently offered by SBM Bank (India) Ltd. in partnership with Paisabazaar.com.

To open a time deposit or fixed deposit account with any post office in India, a person should be any of the following:

• Single adult
• Minor who is more than 10 years old
• Legal guardian on behalf of minor or a person of unsound mind (lunatic)

Note: Joint account can be opened with up to 3 members.

To open fixed deposit in post office, the following documents need to be submitted:

• Photo ID Proof (e.g. Aadhaar Card, Voter ID Card, etc.)
• Address Proof (e.g. Electricity Bill, Water Bill, Ration Card, Aadhar Card, etc.)
• PAN Card
• Passport size photographs (2 or more)

Note: This is an indicative list.

To open a fixed deposit account or time deposit account in any post office in India, customer can opt either offline mode or online.

1. Online Mode

The account opening facility is available online via Intra Operable Netbanking/Mobile Banking.

Since 2018, customers have been provided with the access of Post Office Internet Banking services under which funds within varied post offices can be transferred.

To open online FD, customers must have the following:

• A valid active savings A/c
• PAN card
• Verified KYC documentation
• Active DOP ATM or debit card
• Valid mobile number and email-ID

How to Open Post Office FD online?

Step 1: Log in to Post Office e-banking (https://ebanking.indiapost.gov.in ) using registered User ID and password.

Step 2: Click on General Services.

Step 3: Find ‘Service Request’ and open the same.

Step 4: Make the (time-deposit) TD opening request using the ‘New Request’ option.

Follow the steps as they appear next to complete the process.

2. Offline Mode

To offline open fixed deposit in Post Office, the following points must be considered:

• Collect the required documents and visit any nearby post office branch of India Post
• Enquire about the current Post Office FD interest rates
• The concerned official shall guide you through the entire account-opening process
• On the successful opening of term deposit, make sure to take the receipt for future references

The following points must be understood properly before investing:

• Once the FD matures and the depositor does not withdraw the same, there will be no extra interest payable post-tenure
• Minors, on achieving 18 years of age, must get the account converted in their name
• If the deposit is made via cheque, then the date of realization of the cheque will be the opening date of FD and interest shall be calculated from this date only
• Deposits can be made in multiples of Rs. 100
• Depositor may, at his will, get the interest credited to their savings account

Q. What is the highest Post Office fixed deposit interest rate?

The highest Post Office FD interest rate is 6.70% for deposits maturing in 5 years. This rate is applicable from 1st April 2020 to 31st December 2020.

Q. Can Post Office FD be opened online?

Yes. Customers need to have a valid single or joint Savings Account (B) to open Post Office Time Deposit online.

Q. What is the maximum deposit amount to open a time deposit account in a post office?

There is no maximum limit. However, the minimum amount required to open the FD is Rs. 1,000.

Q. Is Post Office FD safe to invest in?

Yes. Investments made in Post Office term deposit account (fixed deposit) is a product of India Post and is offered under its National Savings Scheme. It is guaranteed by the Government of India and is thus safe to invest.

Q. Is it possible to break the Post Office fixed deposit?

To break the FD, one should wait till 6 months from the date of opening the account. Post that, premature withdrawal is allowed. Click here.

Q. Can one avail loan against Post Office FD?

At present, this facility is not mentioned.

Q. How many members can open this FD jointly?

It can be opened with a maximum of 3 members.

Q. Can one claim 80C deductions for investment done in post office time deposit account?

An investment made for a period of 5 years can be claimed for tax deductions u/s 80C of the Income Tax Act, 1961.

Q. Do I have to pay tax on investments made in Post Office fixed deposit scheme?

TDS is NOT charged on time deposit/ fixed deposit or recurring deposit made in post offices.

Footnote: Post Office Time Deposit Account is one of the nine account options offered by India Post under its National Savings Scheme. The scheme includes the likes of Public Provident Fund (PPF) Account, Senior Citizens Savings Account, etc.