Post Office Tax Saving FD: How to get Rs 4.50 lakh interest on Rs 10 lakh investment; tax benefits and more

Post Office Tax Saving FD: Fixed Deposit is a popular investment scheme across India as it provides guaranteed returns to investors. Post Office FDs, also known as Post Office Time Deposit Account (TD), offer investment schemes of 1-, 2-, 3-, and 5-year tenures.

However, the 5-year FD is also known as a post office tax saving FD. This FD falls in the Exempt-Exempt-Exempt (EEE category), which means the invested amount, interest earned, and maturity amount under this scheme are tax free. Investments up to Rs 1.50 lakh in the 5-year post office FD are eligible for tax benefits under Section 80C of the Income Tax Act. The other benefit it provides is the highest interest rate at 7.5 per cent among all post office FDs. The interest that you earn on this FD is payable annually but calculated quarterly. If you invest Rs 10 lakh in this scheme and withdraw your money after the completion of the FD, you will get Rs 4,49,948 as interest. But before we show it to you through calculations, let's go to the basics of the 5-year post office FD and how it works.

Post Office Tax Saving FD: How to get Rs 4.50 lakh interest on Rs 10 lakh investment

If you invest Rs 10 lakh in the 5-year post office FD and get 7.5 per cent interest on the amount, in five years, you will earn a total interest of Rs 4,49,948, and the maturity value of your investment will be Rs 14,49,948.

What is National Savings Time Deposit Account Scheme?

The government-backed post office FD scheme offers interest returns payable annually and compounded quarterly. The minimum investment in the scheme is Rs 1,000 and in multiples of Rs 100. There is no maximum return limit. Interest rates range from 6.9 per cent to 7.5 per cent for FDs of different durations. The interest rates for 1-, 2-, 3-, and 5-year FD schemes are 6.90 per cent, 7.00 per cent, 7.10 per cent and 7.50 per cent, respectively.

National Savings Time Deposit Account Scheme: Tax benefits?

The five-year FD scheme gives tax benefits of up to Rs 1.50 lakh under Section 80C of the Income Tax Act. While interest payments above Rs 50,000 for senior citizens and Rs 40,000 for other depositors attract tax deducted at source (TDS).

National Savings Time Deposit Account Scheme: Who is eligible for the scheme?

Adults can open and operate an account on their own or in groups of up to three.

The post office also accepts accounts in the names of minors with a legal guardian managing the account until the minor reaches the age of 18.