Postal Savings Plan: Fixed deposits have a different kind of relationship with the middle class and the elderly in India. For a very long time, fixed deposits have been the investment option of choice for the Indian middle class.
For the average middle-class Indian citizen, investing in good schemes with attractive fixed interest rates remains one of the top priorities. Although a low return financial investment tool, FDs are preferred over other options due to their risk-free nature. They offer both short and long term investment options depending on the needs and requirements of the clients.
Apart from banks, FD schemes are also provided through the post office which in some cases offer better interest rates than major lenders. Rates are revised quarterly based on market conditions and government policies.
Postal Savings Plans are investment instruments that offer a higher return than term deposits. While fixed deposits are guaranteed by banks, the interest rate and tax benefits are not as high as postal savings schemes.
The post office offers a range of savings schemes which are beneficial to the middle class Indian household. The National Savings Time Deposit Account (TD) is one of them. The Swiss Post term deposit also offers various advantages, in addition to state guarantees, as well as higher interest rates than those of the banks.
FD Post Office Features
An FD postal account can be opened with a minimum amount of Rs 1,000 and in multiples of Rs 100. There is no maximum investment limit in these accounts.
The interest in this case will be payable annually, indicates the Post Office on its website. “No additional interest will be payable on the amount of interest that has become due but not withdrawn by the account holder,” according to the India Post website. However, this interest will be compounded quarterly.
FD Post Office Interest Rate
While post office FD rates are generally meant to be revised quarterly, they have remained unchanged since April 1, 2020. Starting with interest offers of 5.5% for the one-year FD plan, the rate of return on post office fixed deposits increases to 6.7 percent.
India Post FD rate for 1 year -5.5%
India Post FD rate for 2 years -5.5%
India Post FD rate for 3 years -5.5%
India Post FD rate for 5 years -6.7%
FD Position Maturity
The amount of the deposit will be refundable after the expiration of one year, two years, three years or five years (as the case may be) from the date of opening. Investment less than five years old TD qualifies for the benefit of Section 80C of the Income Tax Act 1961.
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