Post Office FD Extension Rules: In how many years, Rs 6 lakh investment in FD can become Rs 18.29 lakh? Know here
Post Office FD Extension Rules: National Savings Time Deposit Account (TD), or Post Office Time Deposit Account, is also known as post office FD. The scheme offers 1-, 2-, 3-, and 5-year guaranteed return schemes.
Post Office FD Extension Rules: National Savings Time Deposit Account (TD), or Post Office Time Deposit Account, is also known as post office FD. The scheme offers 1-, 2-, 3-, and 5-year guaranteed return schemes. One can have a single or a joint account, and any number of accounts can be opened in the post office FD.
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(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
Post office FD
Post office also offers FD schemes, which are known as National Savings Time Deposit Account (TD), or Post Office Time Deposit Account. It offers 1-, 2-, 3-, and 5-year FDs, where interest is payable annually but calculated quarterly. Unlike many bank FDs, it doesn't offer monthly, quarterly, or half-yearly withdrawals. On maturity, the FD offers the facility of extension, where the policy holder can extend their FD period within months of the maturity period. Post office offers unlimited extensions of FDs.
Post Office FD: Minimum and maximum investment
The minimum investment in the post office FD is Rs 1,000, while there is no maximum limit.
Post Office FD: Interest rates
Period Interest Rates
1-year FD- 6.9 per cent
2-year FD- 7.0 per cent
3-year FD- 7.1 per cent
5-year FD- 7.5 per cent
Post Office FD tax benefits
Deposits up to Rs 1.50 lakh in a financial year in the 5-year FD provide tax benefits under Section 80C of the Income Tax Act, 1961.
Post Office FD: Premature closure of account
As per the Post Office website, no deposit shall be withdrawn before the expiry of six months from the date of the deposit.
If an FD account is closed after 6 month but before 1 year, PO Savings Account Interest rate will be applicable.
Post Office FD: Premature closure of account
If the 2/3/5-year FD account prematurely closed after 1 year, interest shall be calculated 2 per cent less than of the FD interest rate (i.e., 1/2/3 years) for completed years, and for part period less than a year, PO Savings Interest rates will be applicable.
Post Office FD: Extension of account
On maturity of the FD, a depositor can further extend their account for another tenure.
The FD account can be extended from the date of maturity within the following prescribed period.
1-year FD = Within 6 months of maturity
2-year FD = Within 12 months of maturity.
3/5-year FD = Within 18 months of maturity.
Post Office FD: Extension of account
At the time of opening of the account, the depositor can submit a request for the extension of the FD account from the date of maturity.
The interest rate applicable to the respective FD account on the day of maturity shall be applicable to the extended period.
How Rs 6 lakh investment will become Rs 18.29 lakh
For that, the investor needs to invest Rs 6 lakh in a 5-year FD and extend their tenure twice.
The maturity on a Rs 6 lakh investment at the end of the 5-year FD will be Rs 8,69,969, where Rs 2,69,969 will be just from interest.
How Rs 6 lakh investment will become Rs 18.29 lakh
When the investor takes the first extension of 5 years, at the end of the tenure, i.e., 10 years, the estimated interest will be Rs 6,61,410, and the estimated maturity amount will be Rs 12,61,410.
How Rs 6 lakh investment will become Rs 18.29 lakh
The investor needs to take another extension of 5 years. After 15 years, estimated return will be Rs 12,28,978 and the estimated maturity amount will be Rs 18,28,978.