Home / Money / Personal Finance /  Post Office deposits: Interest rate, income tax benefits explained in 10 points

Post offices offer several saving schemes across different time periods with different interest rates. One such saving scheme offered by India Post is time deposit or fixed deposit. The Post Office Time Deposit (POTD) is similar to bank fixed deposits (FDs), also known as term deposits. The USP of POTD is that it is backed by the government. The interest rate offered on these schemes are reviewed quarterly by the government. Recurring Deposit Account (RD), Public Provident Fund (PPF), Kisan Vikas Patra, Monthly Income Scheme Account (MIS), Sukanya Samriddhi Yojana are some of the other well-known schemes offered by Post Office.

Here are 10 things to know about post office fixed deposit account:

1) Post Office deposits account can be opened by an individual by cash or cheque. In case of a cheque, the date of realisation of cheque in government's account shall be the date of opening of account.

2) The interest on Post Office deposits was revised on 1 July 2019. For one-year time deposit, Post Office offers an interest rate of 6.9%. For time deposit for a tenure of 2 and three years, it offers an interest rate of 6.9%. For five year time deposit account, Post Office offers an interest rate of 7.7%.

Post office time deposits
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Post office time deposits

3) The minimum amount required to open Post Office FD account is 200 and in multiples thereof. However, there is no maximum limit.

4) Investments made under the 5-year fixed deposit account qualifies for income tax benefits under Section 80C of the Income Tax Act. However, there is no tax benefit on the deposits with less than five-year tenure.

5) At the end of the post office time deposit's tenure, the deposited amount with interest earned on the income is taxable.

6) The money in these Post Office deposits is completely protected, with guaranteed returns, as the scheme is backed by the government.

7) Nomination facility is available at the time of opening and also after opening of account.

8) The Post Office deposits account can be opened in the name of a minor and a joint account can be opened by two adults.

9) Any number of POTD accounts can be opened in any post office.

10) Portability of the account between post offices is possible.

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