India Post, which operates our country’s post offices, offers post office FD interest rates ranging from 6.90% to 7.50% per annum for terms ranging from one to five years. For the general public, the annual interest rate on the Post Office Tax Savings FD is 7.50%. These FD schemes provide the highest level of capital protection and income predictability for depositors because they are guaranteed by a sovereign guarantee by the Union Ministry of Finance. The National Savings Institute, which is part of the Union Ministry of Finance’s Department of Economic Affairs, manages these FD plans, as it does other modest savings schemes. As a result, Post Office Fixed Deposits (POFD) are often referred to as National Savings Time Deposits.
Types of Post Office FD Schemes:
National Savings’ Time Deposit Account
- Tenor: PO FD can be opened for one, two, three, or five years.
- Minimum Deposit Amount: The minimum deposit for this account is Rs 1,000, with subsequent deposits made in multiples of Rs 100.
- Taxation: Any investment in a 5-year PO FD account qualifies for tax breaks under Section 80C of the Income Tax Act.
- Interest: The interest on a PO FD account is paid annually. Interest is compounded quarterly. If the account holder does not withdraw their interest amount before the due date, they will not be eligible for extra interest on the interest amount.
- Extension: When the depositor’s PO FD account matures, they can extend it for another tenor. They can prolong the account within a specified term from the date of maturity, which is as follows: One-year PO FD account that matures within six months. 2 year PO FD account – within 12 months of maturity. 3/5 year PO FD account that will mature within 18 months. The interest rate will remain unchanged if the account is extended.
- Eligibility: It may be opened by any of the following individuals: An adult. A guardian on behalf of a minor or a person with unsound mind. A minor over 10 years old in their own name, or a joint account holder with up to three adults.
National Savings’ Monthly Income Account
- The National Savings Monthly Income Account provides customers with monthly interest income to help them manage their regular costs.
- Tenor: This account can be opened for five years.
- Minimum Deposit Amount: The minimum deposit for this account is Rs 1,000, with subsequent deposits in multiples of Rs 1,000.
- Maximum Deposit Amount: A single account can make a maximum deposit of Rs 4.5 lakh, while a joint account can make up to Rs 9 lakh. The limit will be set separately for an account opened by a guardian on behalf of a minor.
- Interest is payable at the end of each month from the date the account is opened and continues until maturity. If the depositor fails to claim the interest due at the end of the month, no extra interest will be earned. Depositors must additionally pay taxes on their interest income.
- Premature Closure: Any deposit made to the National Savings Monthly Income Account account can be withdrawn only one year after the date of deposit. The following circumstances apply in case of account closure: If the account is closed after one year but before three years from the date it was opened, 2% of the deposit amount will be removed.
- Maturity: This account matures in 5 years. If the account holder dies before maturity, the account can be canceled and the entire balance repaid to their nominee or legal heirs. The interest will be charged for the month preceding the date of the refund.
- Eligibility: It may be opened by any of the following individuals: An adult.
- A guardian acts on behalf of a juvenile or mentally ill individual. Minors over 10 years old should be registered under their own names. A joint account holder (including up to three adults).
Documents Required for Post Office FD Scheme:
The various paperwork necessary for the Post Office FD scheme are listed below.
- Post Office FD Application Form
- Proof of address can include a phone bill, an electricity bill, a passport, and so on.
- Identity proofs include Aadhaar cards, PAN cards, driver’s licenses, voter ID cards, and so on.