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Post Office Fixed Deposit (FD) Scheme

Published On May 31, 2021, Updated On Jul 13, 2021

Post Office Fixed Deposit (FD) Scheme is one of the traditional schemes that Indian post offices have been offering since very long. As it is backed by the government of India, therefore, there are many Indian households that prefer to put their hard earned money in a Post Office fixed deposit scheme. It is also a good option for people who do not have a bank nearby their place of residence as they can invest in the nearest post office without any hassle. 

What is a Post Office Fixed Deposit (FD) Scheme?

A fixed deposit is an investment scheme that lets you deposit money in fixed deposits thereby letting you earn on the investment. Apart from the investment, these schemes also allow you to enjoy tax benefits under Section 80C of the old regime. These FDs can be of different terms such as 1 year, 2 years, 3 years, and 5 years. Currently, the interest rates for the FDs vary between 6.9% to 7.7%. The FD interest paid is charged with Tax Deduction at Source (TDS). The FD scheme or post office fixed deposit can be considered as a great alternative to bank FD. With Indian Postal Services, an individual investor can invest money in a post office fixed deposit scheme and earn a guaranteed return on the sum deposited, for a specific time period. 

What Is The Eligibility For Post Office Fixed Deposit 

Anyone of the following can get an account opened:

  • A single adult
  • Minor who is aged above 10 years
  • Joint account (maximum 3 adults)
  • A guardian on behalf of a differently abled person or a minor

Documents Required For Post Office FD

Following are the documents required for post office FD: 

  • Address Proof: Telephone bill, electricity bill, bank statement inclusive of cheque, post office issued ID or certificate, or passport. 
  • Identity Proof: Voter ID card, PAN card, Aadhaar card, driving licence, photo ration card, and passport. 

As an investor, you will also be required to provide details of the nominee for FD. Also, there should be a witness when the nominee signs the investment paper. 

Benefits Of Investing in Post Office Fixed Deposit 

Post Office Fixed Deposits or Post Office Time Deposits (POTD) offer the investors the following benefits: 

  1. Guaranteed Returns: as the government backs this scheme, it is safer and more reliable than FD options from other financial institutions. 
  2. Fine Rate of Interest: Post Office Fixed Deposit results in a considerably high rate of interests as compared to other schemes. 
  3. No Volatility: POTD is not affected by the ups and downs of the market. You will get the same rate of interest as guaranteed no matter what the market is experiencing.  
  4. Other Facilities: Investors can avail tax benefits on interest earned on these schemes. Also, they can withdraw the invested sum prematurely as well as avail loans against the value of the POTD plan.  

Bottom Line

A Post Office Fixed Deposit is an ideal choice for conservative investors like retirees, or those who are about to get retired. It is a good investment option for those who want to go for a low-risk investment option with a steady income along with capital protection. But note that NRIs cannot invest in the scheme. So, if you fulfil the eligibility criteria, then invest in one now!

Also Read: Term Insurance Tax Benefit | Tax Benefits of Term Plan

Why Should You Buy a Term Insurance Plan Online? 

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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