Post Office Time Deposit Scheme: Every person dreams of having a financially secure and prosperous future. For this, people adopt different ways of saving and investing. Many people invest in schemes like PPF, Sukanya Samriddhi Yojana, while some also choose safe options like Fixed Deposit (FD). If you also want to get a strong return with a guarantee without any risk, then Post Office has a great scheme for you.
By investing in this scheme, you can create a fund of Rs 15 lakh with just an amount of Rs 5 lakh. The name of this scheme is ‘Post Office Time Deposit Scheme’, which is similar to bank FD but has many benefits. Let’s know about this scheme in detail.
Post Office Time Deposit Scheme
Post Office Time Deposit (POTD) currently offers an interest rate of 7.5% per annum on a 5-year investment, which is higher than most bank FDs. The real magic of this scheme lies in the power of compound interest and the strategy of renewing the investment.
- First 5 years: Suppose you invest ₹5,00,000 in this scheme. At the rate of 7.5%, you will get a total of ₹7,24,974 at maturity after 5 years .
- Another 5 years: Now, you don’t have to withdraw this amount. Instead, renew the entire ₹7,24,974 in a time deposit again for 5 years. At the rate of 7.5% on this amount, you will get an interest of about ₹5,51,175 in the next 5 years and your total amount will be ₹10,51,175 .
- Third 5 years: Repeat the same process for the third time. Get the amount of ₹10,51,175 renewed for another 5 years. At the end of 15 years, your amount will increase to ₹15,24,149 .
Thus, in 15 years you can earn interest of around ₹10,24,149 on an investment of ₹5 lakh.
Post Office Time Deposit Interest Rates
Time deposit accounts can be opened at post offices for a period of 1, 2, 3 and 5 years. The interest rates on each are different. (Note: These interest rates may be changed by the government on a quarterly basis.)
| Duration | Annual interest rate |
|---|---|
| 1 year account | 6.9% |
| 2 year account | 7.0% |
| 3 year account | 7.1% |
| 5 year account | 7.5% |
Key features and benefits of the scheme
1. Government Guarantee: This scheme is completely safe as it is backed by the Government of India. There is no risk of your money going down the drain.
2. Tax exemption: Investment in 5-year time deposits is eligible for tax exemption under Section 80C of the Income Tax Act. You can save tax on investments up to ₹1.5 lakh per annum.
3. Who can open an account?: Any Indian citizen can open this account. Single, joint account up to 3 people, account can be opened in the name of a minor above 10 years of age or on behalf of a minor by a guardian.
4. Investment Limit: The account can be opened with a minimum of ₹1000 and there is no maximum limit for investment.
5. Interest Calculation: Interest is calculated on a quarterly compounding basis, but is paid annually. This provides the benefit of earning interest on interest.
6. Account pledging facility: If needed, you can also take a loan against this time deposit account by pledging it with a bank or housing finance company.
Rules for withdrawing money and extending the account
- You cannot withdraw money before 6 months from the deposit date.
- If the account is closed after 6 months but before 1 year, the interest rate of the post office savings account will be applicable.
- After maturity, you can extend the account for the same period. A 5-year account can be renewed within 18 months of maturity.
For those who want to grow their money safely while staying away from the risks of the stock market, the Post Office’s Time Deposit Scheme is an excellent option.
| Info In Gujarati | View |
Special Note: Here we are not giving any investment advice, we have only shared the information available on the internet. Before making any kind of investment, please take information from the official website of that scheme. We are not responsible for any kind of loss.