Post Office FD Interest Rate 2024: Benefits & Taxes on FD Account

By Okbima 30 Nov 2023 377
Post Office FD Interest Rate

The Post Office FD Interest Rate 2024 ranges from  6.90% to 7.5% per annum for 1 to 5 years tenures. Originally introduced as the National Savings Time Deposit Account Scheme, this FD plan aims to promote savings habits and provide a secure avenue for risk-free investment. 

Investors can capitalize on these rates, aligning with their financial goals while contributing to a culture of prudent financial management. It's a government-backed option offering stability and attractive returns during the specified period.

 

Post Office FD Interest Rate 2024 

Below, we have mentioned the latest updated post office FD interest rate in 2024, which can help you decide whether it is the right time to invest in post office fixed deposits or not.

Interest rates

6.90% - 7.50%

Tenure

1 year - 5 years

Min and Max amount

Rs-200 - no limit

Compounding

Quarterly

 

Note: Please note that all fixed deposit rates for the post office listed above are valid for the period 01.10, 2024 through 31.12, 2024.

 

Post Office FD Interest Rate for Senior Citizens

Senior citizens can open a Post Office FD at any post office in India. They can also open a joint account and a post office senior citizen savings scheme. Below, we have mentioned a table of the Post Office FD interest rate for senior citizens:

 

1 year                   

6.9%                                     

2 years

7.0%

3 years

7.1%

4 years

7.2%

5 years

7.5%            

 

What is the Post Office Fixed Deposit Scheme?

The Post Office FD (Fixed Deposit), is a financial investment scheme offered by the Post Office, and it allows individuals to deposit a fixed amount of money for a specific period, usually ranging from 1 to 5 years, at a fixed interest rate. The interest rate offered by the Post Office FD is generally higher than the interest rates offered by regular savings accounts. 

The scheme is considered safe as it is backed by the government, providing individuals with a secure investment option. The maturity amount, including the principal and the interest earned, is paid to the investor after the completion of the fixed tenure.

 

Benefits of the Post Office FD Account

Opening Post Office FD provides many benefits such as attractive interest rates, flexible deposit periods, and many more. Some of the benefits are mentioned below.

 

  1. Attractive Interest Rates: The Post Office Fixed Deposit (FD) offers competitive interest rates that are usually higher than the interest rates offered by banks. This makes it an attractive investment option for individuals looking to earn a fixed income.

  2. Flexible Deposit Periods: The Post Office FD offers a flexible deposit period, ranging from 1 year to 5 years. This allows investors to choose a deposit period that suits their financial goals and requirements.

  3. Guaranteed Returns: The Post Office FD provides guaranteed returns on the investment. Unlike other investment options that are subject to market risks, the FD ensures that the principal amount remains safe and earns a fixed interest for the chosen period.

  4. Tax Benefits: The interest earned from a Post Office FD is eligible for tax exemption under Section 80C of the Income Tax Act, up to a certain limit. This makes it an attractive option for individuals looking for tax-saving investments.

  5. Nomination Facility: The Post Office FD allows investors to nominate a person who would receive the investment proceeds in case of the investor's demise. This ensures that the investment remains protected and the nominee can claim the investment without any legal hassles.

  6. Easy Accessibility: Post Offices are widely accessible across the country, making it convenient for individuals in both urban and rural areas to open and manage their FD accounts. Additionally, the simple documentation process for opening an FD account further adds to the accessibility factor.

  7. Low Minimum Deposit Requirement: The Post Office FD has a low minimum deposit requirement, making it accessible to individuals with varying income levels. This feature allows individuals to start investing with a small amount and gradually increase their investment.

  8. Automatic Renewal: The Post Office FD offers the convenience of automatic renewal of the deposit at maturity. This means that the investment continues to earn interest for another term, without the need for the investor to initiate the renewal process.

  9. Loan Against FD: In case of financial emergencies, individuals can avail of a loan against their Post Office FD. The loan amount can be a percentage of the FD value, depending on the guidelines set by the Post Office.

  10. Safety and Security: The Post Office FD is considered a safe investment option as it is backed by the Government of India. The principal amount and interest earned are secure, providing investors with peace of mind.

 

Taxes on the Post Office Fixed Deposit

When it comes to investments, Post Office Fixed Deposits (FDs) have always been a popular choice among individuals in India. Offering assured returns and a secure investment option, FDs are a favored option for those looking to protect and grow their savings. However, it is essential to understand the tax implications associated with investing in Post Office FDs.

 

• Interest Income: The interest income earned from Post Office FDs is taxable under the head of "Income from Other Sources" as per the Section 80C Income Tax Act, 1961. The interest earned is added to an individual's total income and is subject to taxation based on the applicable slab rate.

• TDS (Tax Deducted at Source): In the case of Post Office FDs, if the interest income exceeds Rs. 40,000 in a financial year, TDS is applicable. The Post Office deducts TDS at a rate of 10% on the total interest income, provided the PAN (Permanent Account Number) is available. If the PAN is not provided, TDS is deducted at a higher rate of 20%.

• Form 15G/15H: If the total income, including the interest income from Post Office FDs, is below the taxable limit, individuals can submit Form 15G (for individuals below 60 years of age) or Form 15H (for senior citizens) to the Post Office to ensure that no TDS is deducted. These forms are a declaration that the individual's income does not exceed the taxable limit, thereby exempting them from TDS.

 

Interest Rate of the Post Office Loan against FD 

The interest rate for a Post Office Loan against a Fixed Deposit (FD) varies depending on the specific scheme chosen by the customer. The Post Office offers various loan schemes against FDs, such as the Post Office Savings Bank Loan, National Savings Certificate Loan, and Kisan Vikas Patra Loan.

 

• Post Office Savings Bank Loan: The interest rate for a loan against a Post Office Savings Bank FD is generally around 2% above the interest rate offered on the FD. For example, if the FD interest rate is 5%, the loan interest rate would be around 7%.

National Savings Certificate (NSC) Loan: The NSC loan interest rate is typically 1% to 2% higher than the NSC interest rate. If the NSC interest rate is 6.8%, the loan interest rate could range between 7.8% to 8.8%.

• Kisan Vikas Patra (KVP) Loan: The interest rate for a KVP loan is generally around 2% above the KVP interest rate. For instance, if the KVP interest rate is 6.9%, the loan interest rate would be approximately 8.9%.

 

Types of the Post Office FD Schemes

In the post office FD schemes, you can open mainly two types of accounts as ‘National Savings Monthly Income Account’ and the ‘National Savings Time Deposit Account’.

1. National Savings Time Deposit Account

This post office fixed deposit scheme allows individuals to deposit a lump sum amount for a fixed term ranging from one year to five years. The interest rates are determined by the government and are revised every quarter. This scheme is suitable for individuals looking for long-term investment options with guaranteed returns.

• Tenure: You can open the post office ‘National Savings Time Deposit Account’ for a tenure of 1,2, or 5 years.

• Eligibility: Open to Adults, Guardians for Minors, Minors over 10, and Joint accounts (maximum 3 adults)

• Minimum Deposit: The minimum deposit in a post office FD account is 1,000 per annum (multiple of Rs 100).

• Taxation: 5-Year PO FDs Offer Tax Benefits Under Section 80C of the Income Tax Act

• Annual Payouts: Cumulated quarterly. No Additional Interest on the Interest amount if interest is not withdrawn on the due date

• Extension: Extendable within a specified period from maturity

 

2. National Savings Monthly Income Account

This post office fixed deposit scheme is designed to provide individuals with a regular monthly income. Individuals can deposit a lump sum amount, and the interest is paid out every month. The rate of interest is determined by the government and is revised periodically. This scheme is ideal for individuals looking for a steady income flow or retirees who require a regular source of income.

 

• Tenure: You can open the post office ‘National Savings Monthly Income Account’ for 5 years. 

• Eligibility: Any Adults, Guardians for Minors, Minors over 10 years of age, and Up to 3 Adults in a Joint Account, are eligible to open the account.

• Minimum Deposit: The minimum deposit amount in ‘National Savings Monthly Income Account’ is 1,000 per annum (multiple of 1,000)

• Maximum Deposit: Max deposit is Rs 4,5 lakh per annum (single) or Rs 9,500 per annum (Joint or Guardians for Minors)

• Interest: The interest rate is monthly, taxable, and non-claimed interest does not earn more interest.

• Premature closure: After 1 year but before 3 years, a 2% deduction, After 3 years but before 5 years, a 1% deduction

 

Comparison of the Post Office FD Interest Rate vs Other Banks' FD Rates

Deciding to invest in a fixed deposit can be challenging and looking for the best FD interest rate is not easy. So, below we have mentioned a table that shows you the comparison between the post office FD interest rate and other banks' FD interest rates.

 

Bank

1-Year FD Rate

2-Year FD Rate

3-Year FD Rate

5-Year FD Rate

Post Office

6.90%

7.00%

7.10%

7.50%

State Bank of India

6.75%

6.85%

6.95%

7.25%

ICICI Bank

6.50%

6.60%

6.70%

7.00%

HDFC Bank

6.50%

6.60%

6.70%

7.00%

Kotak Mahindra Bank

6.50%

6.75%

6.90%

7.25%

Axis Bank

6.60%

6.75%

6.85%

7.15%

Bank of Baroda

6.50%

6.60%

6.70%

7.00%

Punjab National Bank

6.50%

6.60%

6.70%

7.00%

Canara Bank

6.50%

6.60%

6.70%

7.00%

 

Process to Open a Post Office Fixed Deposit Account

Investing in a Post Office Fixed Deposit (FD) is a secure and reliable way to grow your savings. Here is a step-by-step guide on how to invest in a Post Office FD:

Online Process to Open a Fixed Deposit Account in Post Office

Opening a fixed deposit account online in the post office is simple and easy. Below, we have mentioned the step-by-step process.

Step 1:  To open a post office FD account, you must first visit the e-banking portal of the post office which is ebanking.indiapost.gov.in.

Step 2: Now, log in to the e-portals of the post office using your registered ID and password.

Step 3: Once you log in, click on the ‘service request’ under the ‘general services’ tab.

Step 4: Now, follow the instructions on the screen click on the 'New Request' option, and start the post office fixed deposit opening request.

 

Offline Process to Open a Fixed Deposit Account in the Post Office

Opening a fixed deposit account offline in the post office is time-consuming compared to the online option. Below, we have mentioned the step-by-step process.

Step 1: Visit your nearest India Post branch to obtain the application form for opening a new Post Office Fixed Deposit account.

Step 2: Submit the completed application form along with copies of the required documents.

Step 3: Post office officials will provide further instructions to complete the account opening process.

 

Eligibility Criteria to Open a Post Office FD Account

To be eligible to open a Post Office Fixed Deposit (FD) account, individuals must meet certain criteria. These criteria may vary slightly depending on the country or region. However, some common eligibility requirements are as follows:

• Age: Applicants must be 18 years of age or older. In some cases, minors may be allowed to open an FD account with the consent of a parent or guardian.

• Citizenship and residency: Typically, the applicant must be a citizen or a resident of the country where the Post Office FD account is being opened. Proof of citizenship or residence may be required.

• Documentation: The applicant must provide valid identification documents, such as a passport, national ID card, or driving license. You may also be asked to provide proof of address, including utility bills or bank statements.

 

Documents Required to Open a Post Office FD Scheme

To open a Post Office Fixed Deposit (FD) in India, you will need to provide certain documents as per the guidelines set by the Post Office. These documents are essential to establish your identity and comply with the regulatory requirements. Here are the documents required:

  1. Identity Proof: You must provide a valid identity document such as your Aadhaar card, PAN card, Voter ID card, Passport, or Driver's License. This proof should have your photograph and signature.

  2. Address Proof: A valid address proof like an Aadhaar Card, Voter ID Card, Passport, and Driving License, with your name and address mentioned can be submitted.

  3. Passport-size Photographs: You will need to carry a few passport-size photographs for the FD application. The number of photographs required may vary depending on the postal department's guidelines.

  4. Account Opening Form: The Post Office will provide an account opening form that needs to be filled out accurately and signed by you.

 

Note: It is advisable to contact your nearest Post Office or Visit the official website of India Post for specific information on the documents required as the requirements may vary with location and time.

 

Conclusion

In conclusion, the interest rates provided by the post office fixed deposit scheme offer a lucrative investment option for individuals seeking secure and long-term financial growth. With competitive rates that often surpass those offered by traditional banks, the post office fixed deposit scheme presents a promising opportunity to accumulate substantial returns while preserving capital. 

Furthermore, the convenience and accessibility of the post office branches make it convenient for a large portion of the population to invest in this scheme. Ultimately, the post office's fixed deposit interest rates make it an attractive option for risk-avoiding investors, helping them achieve their financial goals with ease and confidence.

 

 

FAQs

The highest interest rate offered by Post Office fixed deposit is 7.50% p.a. for a 5-year tenure.

The minimum deposit required to open a post office fixed deposit account is ?200.

Yes, you can take a loan against your Post Office FD. The loan-to-value ratio (LTV) for Post Office FDs is 90%. This means that you can borrow up to 90% of the value of your FD as a loan.

The documents needed to open a fixed deposit account in a post office are an identity card, address proof, and a PAN card.

The eligibility criteria for opening a post office FD account are, that your age should be above 18 and must be an Indian resident.

To calculate your post office FD returns, you can use the following formula: Maturity value = Principal × (1 + Interest rate/100)^Tenure.

Post Office FDs are exempt from tax under Section 80C of the Income Tax Act, 1961. However, the interest earned on Post Office FDs is taxable.

Premature withdrawal from a Post Office FD is allowed, but you will be charged a penalty. The penalty depends on the tenure of the FD.

The FD Rate in Post Office 2023 ranges from 6.90% to 7.50% p.a. for tenures of 1 to 5 years.

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