The Complete Guide to Post Office FD Rates: Features, Benefits, and Eligibility Criteria

If you’re looking for a safe and secure investment option that offers guaranteed returns, then a Post Office Fixed Deposit (FD) is a good choice. The Post Office FD scheme is one of the most popular investment options among risk-averse investors. In this article, we’ll take a closer look at the Post Office FD rates, features, benefits, and eligibility criteria.

Features of Post Office FDs

Guaranteed Returns: Post Office FDs offer guaranteed returns, which means that you’ll earn a fixed rate of interest on your investment.

Low Risk: Post Office FDs are backed by the government, which makes them one of the safest investment options available. Your investment is not subject to market risks or fluctuations.

Post Office FD Interest Rate 2023: The Post Office FD interest rates are reviewed and revised periodically by the government. As of March 2023, the interest rate for Post Office FDs with a tenure of one year is 6.6%. The interest rate for Post Office FDs with a tenure of two years is 6.8%, while for three years, it is 6.9%. For a five-year tenure, the interest rate is 7.0%. The interest on Post Office FDs has compounded annually, which means that the interest earned in the previous year is added to the principal amount and the interest is calculated on the new amount. The interest is paid out at maturity along with the principal amount.

Flexible Tenure: You can choose the tenure of your Post Office FD based on your investment goals and requirements. The tenure options range from 1 year to 5 years.

Tax Benefits: Post Office FDs offer tax benefits under Section 80C of the Income Tax Act, 1961. You can claim a deduction of up to Rs. 1.5 lakh on your investment in Post Office FDs.

Nomination Facility: You can nominate a person to receive the proceeds of your Post Office FD in case of your untimely demise.

Benefits of Post Office FDs

Regular Income: Post Office FDs offer a regular and stable source of income. The interest earned on your investment is paid out at maturity, which can help supplement your regular income.

Liquidity: Post Office FDs come with a premature withdrawal facility. In case of an emergency, you can withdraw your investment before the maturity date subject to certain conditions and penalties.

No TDS: Post Office FDs do not attract Tax Deducted at Source (TDS) on the interest earned if the interest income does not exceed Rs. 40,000 for individual accounts and Rs. 80,000 for joint accounts in a financial year.

Eligibility Criteria:

Age: To invest in a Post Office FD, you must be at least 18 years old. Minors can also invest in Post Office FDs, but the account must be opened by their parents or guardians.

Citizenship: Post Office FDs are available to all Indian citizens, including resident individuals, HUFs (Hindu Undivided Families), and NRIs (Non-Resident Indians). However, NRIs can only invest in Post Office FDs through their NRE (Non-Resident External) or NRO (Non-Resident Ordinary) accounts.

Account Type: You can open a Post Office FD account in your name, jointly with another person, or on behalf of a minor. The account can also be opened in the name of a trust, society, or association.

Documentation: To open a Post Office FD account, you will need to submit the following documents:

A filled-in application form

Identity proof (Aadhaar card, PAN card, passport, voter ID card, or driving license)

Address proof (Aadhaar card, voter ID card, driving license, or utility bill)

Photographs (passport size)

PAN card (mandatory for investments above Rs. 50,000)

Minimum Investment: The minimum investment amount for a Post Office FD is Rs. 1,000.

Tenure: The tenure for a Post Office FD ranges from 1 year to 5 years. You can choose the tenure based on your investment goals and requirements.

Post Office FDs are a safe and secure investment option that offers guaranteed returns, low risk, and tax benefits. While investing in Post Office FDs can be a great way to build your savings, it’s also important to consider other investment options like the NPS scheme for long-term retirement planning. If you’re looking for an FD that offers security as well as high FD rates then you can consider Bajaj Finance which offers FD rates up to 8.10% p.a. on deposits. 

Premature Withdrawal: You can withdraw your Post Office FD investment before the maturity date, subject to certain conditions and penalties. Premature withdrawal is allowed after 6 months from the date of investment.