Post Office Time Deposit: Interest rate, tax benefits explained

Post Office Time Deposit (also, often called as Fixed Deposit) is one of the easiest options for saving money and earning interest rate up to 7.8 per cent. You can open Time Deposit (TD) account in the post office by cash, or cheque. According to the official Post Office website, if you make payment by cheque then the date of realisation of the cheque in the government account is considered as the date of opening of the time deposit account. The post office also provides the nomination facility at the time of opening. In case, you miss it at the time of opening the TD account, you can avail the nomination facility even after opening the account. 

You can also transfer the Post Office time deposit account from one post office to another. An individual can open any number of TD accounts in any post office. It can be opened in the name of a minor. The minor of 10 years and above age can open and operate the account, Post office also provides joint TD account, which can be opened by two adults. Even the single account can be converted into Joint and Vice Versa. 

Post Office Time Deposit: Interest Rates

Period       Rate
1yr.A/c -   7.0%
2yr.A/c  - 7.0%
3yr.A/c   - 7.0%
5yr.A/c   - 7.8 %

When any TD account matures in CBS post offices, it gets automatically renewed for the period for which the account was initially opened. For example, the 2-year TD account will be automatically renewed for 2 years. The interest rate applicable on the day of maturity will also be applied.

Tax benefit: The investment under 5 Years TD in post office qualifies for the benefit of Section 80C of the Income Tax Act, 1961.