Post office time deposit account (POTD) is one of the most well known investment schemes offered by the India Post to the general public. Post Office Time Deposit Scheme offered by India Post is particularly popular in rural and remote areas of India that are relatively under-banked and have limited access to investment products.
Post Office Time Deposit Scheme Interest Rates
The following are the interest rates of the post office time deposit account applicable from 1st October 2018 to 31st December 2018*:
| Account Tenure | Applicable Interest Rate |
| 1 Year Account | 6.9% |
| 2 Year Account | 7.0% |
| 3 Year Account | 7.2% |
| 5 Year Account | 7.8% |
*The above interest rates are subject to periodic change as per decisions of the Finance Ministry. The above rates are applicable from 1st October 2018 to 31st December 2018.
Key Features
The following are the key features of the post office time deposit schemes:
- Deposits under post office time deposit schemes can have tenure of 1, 2, 3 or 5 years.
- This post office scheme promises assured returns on the account holder’s investments.
- The time deposit accounts can be easily transferred from one post office to another.
- Time deposit accounts can be either sole operated or jointly held.
- Tenure of time deposit account can be extended upon maturity.
- If proceeds of mature account are not withdrawn, the account is automatically renewed for the original deposit tenure at applicable interest rates on the date of maturity.
- There is no cap on the number of time deposit accounts that can be opened.
- Minimum deposit required to invest in the Post Office Time Deposit scheme is Rs.200.
Eligibility
The following are eligible to opening a Post Office Time Deposit Account :
- All resident Indians can open and operate this account either singly or jointly.
- A minor aged 10 years or more can open and also operate this account.
- A parent/guardian can open a Post Office Time Deposit account on behalf of a minor.
- Non-resident Indians are not allowed to open a Post Office TD account.
The following groups/funds are also not allowed to avail Post Office Time Deposit Schemes :
- Institutional account holders
- Trust funds
- Regimental funds
- Welfare funds
Benefits of Post Office Time Deposit Schemes
The following are key benefits of a Post Office Time Deposit account:
- Post Office Time Deposit Scheme provides guaranteed return on investment.
- 5 Year Time Deposits qualify for tax deduction under Section 80C.
- Even minors aged 10 years and above can operate the account by themselves.
- Nomination facility is available.
- Flexible investments – low minimum amount of Rs. 200 and no maximum investment limit.
- Accounts are easily transferable from one post office to another.
- Premature withdrawal of deposits is allowed.
Premature Withdrawal of POTD Funds
Post office time deposit accounts permits the account holders to withdraw funds before maturity. A minimum of 6 months must have passed from the date of first deposit to qualify for premature withdrawal. The following are key terms and conditions in case of premature withdrawal of a Time Deposit :
- If premature withdrawal of 1/2/3 or 5 year POTD is made after completion of 6 months but before completion of 1 year from date of time deposit account opening, simple interest is payable as per Post Office Savings Account interest rate.
- If premature withdrawal of 1/2/3 or 5 year TD account is done after 1 year from date of account opening, the applicable interest rate is 1% lower that the interest rate corresponding to the tenure the account was originally booked for.