Post Office Time Deposit Scheme:- The Indian Post offers a well-known investing program called the Post Office Time Deposit Account. This program is accessible to everyone and is more well-liked in the country’s rural and isolated locations. Read the complete post to get complete information related to Post Office Time Deposit Scheme including Benefits, Features, Interest Rates, Eligibility Criteria, Required Documents, Benefits from Taxation under POTD, POTD Funds Premature Withdrawal, and much more
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Post Office Time Deposit Scheme 2023
One of India Post’s most well-known investing programs is the Post Office Time Deposit Account (POTD). The POTD Account does not have an investment limit. Additionally, investments can be multiplied by multiples of Rs 100. At the start of each financial quarter, the Indian Finance Ministry examines the scheme’s interest rates. The yield on government securities is used to determine the interest rate, which typically has a spread over the yield in the government sector.
Benefits of Post Office Time Deposit Scheme
Some of the key benefits of the Post Office Time Deposit Scheme are as follows:
- The POTD Scheme offers a guaranteed rate of return.
- Even minors 10 years old and older can manage the account independently.
- Section 80C of the Income Tax Act allows tax deductions for 5 Year Time Deposits.
- There is no maximum investment amount and the investments can be made with as little as Rs. 200.
- There is a facility for nomination.
- Accounts can simply be transferred between post offices, and deposits can be withdrawn early.
- There is no restriction on how many accounts can be opened at any one post office.
- Because the principal invested and the interest received are covered by a state guarantee, POTD investments are thought to be safer than FDs.
Features of Post Office Time Deposit Scheme
Some of the key features of the Post Office Time Deposit Scheme are as follows:
- One deposit may be placed in a single account under the POTD schemes, and the tenure of the deposit may be 1, 2, 3, or 5.
- Transferring the time deposit accounts from one post office to another is simple.
- This post office program assures investors of returns on their money.
- After a time deposit account matures, account holders have the option of extending its tenure.
- Time deposit accounts can be individually or jointly owned.
- The account will automatically renew for the initial deposit duration at the applicable interest rates as of the date of maturity if the proceeds from a mature account are not withdrawn.
- All public sector banks as well as several private institutions, including ICICI Bank, Axis Bank, and HDFC Bank, have recently received authorization from the central government to permit investors to open POTD accounts.
- There is no restriction on how many time deposit accounts can be opened.
- Investors might favour POTD investments over bank fixed deposits.
- The Post Office Time Deposit program requires a 200 rupee minimum deposit. The sum to be placed should only be in multiples of 200, it must be noted. If not, the sum in multiples of 200 will be kept in the account and the remaining funds will be repaid without any interest.
POTD Scheme Interest Rates
At the beginning of each quarter of the tax year, the Indian Finance Ministry evaluates the post office FD interest rates. The yield on government securities, which includes the yield for the government section, is used to calculate the interest rate. The interest rate that will be in effect from January 1 through March 31, 2019 is shown in the table below:
|Account Term||Interest Rate Applicable|
|01 year||6.9 percent|
|02 years||6.9 percent|
|03 years||6.9 percent|
|05 years||7.7 percent|
Eligibility Criteria for Post Office Time Deposit Scheme
The applicants applying for Post Office Time Deposit Scheme must fulfill the following eligibility criteria:
- Any Indian citizen may open one account.
- A minor who is 10 years old or older can not only open the account but also manage it.
- Up to three adults may open a joint account with the individual.
- A parent or legal representative may also open the account on the minor’s behalf.
- The guardian may open the account on behalf of the account holder who lacks capacity.
- Groups or funds like welfare funds, trust funds, regimental funds, and holders of institutional accounts are excluded from the POTD program
- The opening of a post office time deposit account is not allowed for NRIs.
Some of the important documents required for POTD Scheme are as follows:
- Passport size photographs
- Filled application form of Post Office Time Deposit Scheme
- Identity Proof like Aadhar Card, PAN Card, or Voter ID
- Address Proof like Ration card, Aadhar card, Voter ID, PAN card, Driving Licence, etc
- Income Proof like Salary slips for the last three months or statements of the bank account for the recent six months
POTD Scheme Taxation Benefits
There is no tax deduction at source (TDS) for small savings investments in post offices. It is important to keep in mind that the interest received on these investments is added to the depositor’s yearly income total in the year of receipt and is subject to taxation at the investor’s marginal tax rate. However, under Section 80C of the Income Tax Act, deposits made for the 5-year tenure are eligible for tax benefits.
POTD Funds Premature Withdrawal
Owners of Post Office Time Deposit Accounts are allowed to withdraw money even before the account reaches maturity. The only prerequisite for qualifying for a premature withdrawal is that a minimum of 6 months must have elapsed since the date of the first deposit. Important terms and conditions in the event of an early withdrawal from a time deposit are as follows.-
- Simple interest is paid in accordance with the Post Office Savings Account interest rate if a premature withdrawal of 1/2/3 or 5-year POTD is made after the completion of 6 months but before the completion of 1 year from the date the time the deposit account was opened.
- After one year from the day the account was opened, if a premature withdrawal of a 1/2/3 or 5-year TD account is made, the interest rate that applies is 1% less than the interest rate that corresponds to the initial tenure booked for the account.