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Post Office FD Interest Rate in India

One of the most popular investment options among individuals seeking safe and secure ways to invest their money with guaranteed2 returns is fixed deposits (FDs). Post Office Fixed Deposits are highly regarded for their government support, appealing interest rates, and reliability among the numerous FD options available. Post Office FDs are appropriate for both short term investment plan and long-term savings plan objectives, as they are designed to meet a wide range of financial requirements.

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FD Rates in Post Office 2024

Post Office FD Interest Rates 2024

FD Rates in Post Office 2024
September 26, 2024

Table of Content

 

Post Office FD Tenure & Interest Rates

If you are someone looking to secure your family's future financial needs, investing in a post office FD for secure returns is a great option. However, you can also consider the HDFC Life Guaranteed income plan3 for fixed returns and insurance coverage. You can distribute your corpus across FDs and guaranteed2 income plans as well to create a balanced financial portfolio. Remember, there are tax benefits under Section 80C1 for both FDs and life insurance premiums.

So, this guide will investigate the most recent post office FD interest rate for 2024, the process of investing in these schemes, FD eligibility criteria, required documents, interest rate comparison, various types of FD schemes, and the benefits and tax implications of investing in a Post Office FD.

The government periodically reviews the post office FD interest rate, which is competitive compared to those of other financial institutions. The post office FD interest rate 2024 is set at the time of investment and remains consistent throughout the deposit. 

The current post office FD interest rate for various tenure options are summarised in the following table [A]:

Tenure

1st April 2024 to 30th June 2024

1 year

6.90%

2 years

7.00%

3 years

7.10%

5 years

7.50%

How to Invest in Post Office FD?

Putting money into a Post Office FD is a simple process. Here is the procedure outlined below for both online and offline ways [B]:

Online Method: Step-by-Step Guide

Follow the steps below for the online method: 

1. Check out the official website: Start by visiting the India Post website or the Post Office Internet Banking website. These sites have all the information and services you need about post office FD scheme.

2. Sign in or register: If you have never used the site before, you must sign up by giving your name, email address, phone number, and address. Users who are already logged in can just use their passwords to log in.

3. Choose a fixed deposit: Go to the website and look for the "Fixed Deposit" area. Pick the plan that fits your financial goals the best. You can do interest rate comparison for better understanding.

4. Fill in the blanks: Type in all the necessary information, like the investment amount, how long it will last, the information about the choice, and any other information asked for.

5. Fund Transfer: Use net banking or any other online payment method to move the investment amount from your linked bank account to your Post Office FD account.

6. Confirmation: Once the money has been transferred successfully, you will get a confirmation letter with all the information about your FD, such as the post office FD interest rate term and maturity amount.

Offline Method: Step-by-Step Guide

Follow the steps below for the offline method: 

1. Go to the Post Office: Find the post office branch closest to you and go there.

2. Gather the Form: Ask for the government FD scheme application form at the counter.

3. Fill out the form: Fill in all the necessary information, such as your name, address, the amount of money you want to spend, and how long you want the FD to last.

4. Send in Documents: Along with the entry form, you must include proof of who you are, proof of your home, and two passport-sized photos.

5. Put down the Amount: The investment plan amount must be paid at the counter. You can pay with cash, a check, or a demand draw.

6. Get Receipt: Once your payment has been verified, get the receipt for your set deposit.

Eligibility to Open a Post Office FD Account

The following individuals are eligible to apply for secure fixed deposits:

  • Indian residents can administer such long term investment plan either individually or jointly.
  • Minors can invest in the Post Office fixed deposit scheme with their legal guardian overseas.
  • Fixed deposit investments through the Post Office are not permissible for NRIs, trusts, corporations, and other organisations.

Documents Required to Open Post Office FD

Investors must submit the following documents for the post office FD scheme-

  • Proof of Address
  • Telephone bill
  • Electricity bill
  • Bank statement inclusive of cheque
  • Post office-issued ID or certificate
  • Passport
  • Proof of Identity
  • Voter ID
  • Pan card
  • Aadhaar card
  • Driving license
  • Photo ration card
  • Passport

Types of Post Office FD Schemes

1. National Savings Time Deposit Account

  • Tenor: Available for 1, 2, 3, and 5 years.
  • Eligibility: This scheme is available to adults, guardians of minors or persons of impaired mind, minors over the age of 10, and joint accounts (with a maximum of three adults).
  • Minimum deposit: Rs 1,000, with subsequent deposits in multiples of Rs 100. No maximum limit.
  • Interest: Quarterly compounded annual payments. No additional interest will be charged on the interest amount if it is not withdrawn by the due date.
  • The investment under 5 year Time deposit qualifies for the benefit of section 80C of Income Tax Act, 19611 subject to the maximum Rs 1.5lacs per year

  • Extension: May be extended within specified time frames subsequent to maturity.

    • 1-yr: Within 6 months

    2-yr: Within 12 months

    3/5-yr: Within 18 months

  • Premature Closure: Withdrawal after six months. Post office FD interest rate have been amended in accordance with the number of completed years.

    • 1-yr PO FD closed at 6 months = PO savings account rate.

    2/3/5-yr PO FD closed at 1+ year = 2% less than completed years' post office FD interest rate

  • Security/Collateral: Transferable/pledged for investment security, such as the President of India, the Governor of a state, banks, RBI, or housing finance.

2. National Savings Monthly Income Account

  • Tenor: Five years
  • Interest rate : 7​.4​ % per annum payable monthly.
  • Eligibility: Adults, guardians of minors, and minors over the age of 10 are eligible to participate in a joint account with up to three adults.
  • Minimum Deposit: Rs 1,000, in multiples of Rs 1,000.
  • The maximum deposit is Rs   9 lakh for a single individual and Rs  15 lakh for a joint account or guardian of a minor.
  • Interest: Interest is accrued monthly & is  taxable.
  • Premature Closure: A 2% deduction is imposed after one year but before three years, and a 1% deduction is imposed after three years but before five years.
  • Maturity: Five years; refund policies regarding early closures are applicable in the event of mortality.

Alternatively, you can also check out the different guaranteed2 income plans by HDFC Life. A good example would be the HDFC Life Sanchay Fixed Maturity Plan4, which offers guaranteed2 lumpsum benefits along with life insurance coverage.

Detailed Features and Benefits of Post Office FD

There are many great things about investing in a Post Office Fixed Deposit that make it a prevalent choice for many investors  [C]:

  • Funds Directly Held by the Government: Post Office FDs are backed by the Government of India, so your money is safe and sound.
  • Secure Fixed Deposits: These FDs offer fixed returns, which makes them a safe choice for buyers who don't want to take risks.
  • Interest Rate Comparison: When you look at other fixed deposit choices on the market, the post office FD interest rate offer is fair.
  • FD Criteria for Eligibility: The simple requirements mean that buyers of all types can open accounts, including people, shared account holders, children, and businesses.
  • Long-term Savings: Post Office FDs are good for long-term savings because they help you reach your financial goals in the future.
  • Tax Breaks on FD: Section 80C of the Income Tax Act1 lets you get tax breaks on investments in these FDs upto Rs 1.5 lacs annually. This means you can save money on taxes.
  • Planning your finances: Putting money into Post Office FDs is an excellent way for financial planning.
  • Security for Your Investment: The capital amount is safe, and the post office FD interest rate will stay the same. This makes your investment stable.
  • Premature Withdrawal: You can choose to withdraw money early, but there are fees that you have to pay for the withdrawal.

Post Office FD Tax

UnderOld tax regime, Section 80C deduction available on amount invested in 5-year Post Office FD or National Savings Term Deposit. It enables you to deduct up to Rs. 1,50,000 from your taxable income.

Keep in mind that people who put money into a post office fixed deposit will have to pay taxes on the interest. People younger than 60 who owe taxes must pay taxes on the interest. On the other hand, for people over the age of 60 interest income is exempt from taxation maximum upto Rs 50,000 under Section 80TTB of income Tax Act1.

For New tax regime, there is no deduction available on amount invested and interest amount received on Post office FD or National saving term deposit is taxable.

Conclusion

While post office FD is a great instrument for secure investment with decent returns, it is important to know that there are several other investment options that may be considered as well. The guaranteed2 investment plans offer equivalent or better returns than Post Office FD Interest Rates and are a must-consider in your investment portfolio as they offer a combination of fixed returns and life insurance. However, always consult your financial advisor for most suitable advice.

Frequently Asked Questions (FAQs)

Q: Is Post Office FD completely safe?

Yes, Post Office Fixed Deposits are completely risk-free because the Indian Government backs them. This means that they are safely kept and will earn you money. This makes them a great investment for people who prefer to avoid taking risks and want to be sure of a return.

Q: Which Post Office fixed savings has the best interest rate?

The best post office FD interest rate 2024 is 7.5% for five years. This rate is good, and it gives you a good return on your money over time.

Q: What is the highest interest rate that the Post Office will pay on FDs?

For investments made over 5 years, the highest interest rate on Post Office FDs is 7.5%. You can calculate the amount through post office FD interest rate calculator.

Q. In terms of returns, which is better- Post Office FD or Bank FD?

Post Office FDs and Bank FDs both have their good points. Since the government backs Post Office FDs, they are very safe and stable. On the other hand, bank fixed deposits may have higher interest rates and more choices for the length of the loan and how to receive the money. 

Q. Does the Post Office provide loans?

The Post Office does offer loans backed by the FD, so account users can get cash without having to break the FD. In times of financial trouble, these schemes can help because it gives you cash while protecting your investment.

Q. Which FD scheme gives the highest interest rate?

The National Savings Time Deposit Account with a 5-year term has the best interest rate at 7.5% as of 2024. This plan is excellent for people who want to get the most money back over a more extended period of time. Calculate the amount through post office FD interest rate calculator for better understanding. 

Q: Is the post office 5-year FD tax-free?

For old tax regime : - Section 80C lets you subtract up to INR 1.5 lakh per year from your taxable income, the amount of money you put into a 5-year Post Office fixed deposit. The interest you earn on this FD, on the other hand, is taxed and needs to be reported as other income. However, for people over the age of 60 interest income is exempt from taxation maximum upto Rs 50,000 under Section 80TTB of income Tax Act1.

For New tax regime : - There is no deduction available on amount invested and interest amount received on Post office FD or National saving term deposit is taxable.

Related Articles

Reference Links:

[A] https://groww.in/fixed-deposit/post-office-fd-interest-rates

[B] https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx

[C] https://cleartax.in/s/post-office-fixed-deposit

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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1. Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions.  Tax Laws are subject to change from time to time. Customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.  

2. Guaranteed benefits shall be payable provided all due premiums have been paid and the policy is in force.

3. HDFC Life Guaranteed Income Insurance Plan UIN: (101N146V04). A Non-Linked Non-Participating Individual Life Insurance Savings Plan.

4. HDFC Life Sanchay Fixed Maturity Plan (UIN: UIN: 101N142V06 ) is a Non-Linked, Non-Participating, Individual, Savings, Life Insurance Plan. Life Insurance Coverage is available in this product. This version of the Product brochure invalidates all previous printed versions for this particular plan.

 

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