Post Office FD Rates

Post Office FD Fixed Deposit

Post Office FD or National Savings Term Deposit was introduced by the Central Government of India through Notification- G.S.R. 922(E) on the 12th of December 2019. The scheme was introduced as the National Savings Time Deposit Scheme, 2019. However, it is popularly known as Post Office FD. The Post Office fixed deposit is regulated by the Post Office of India. 

The intent of introducing this scheme is to instil a habit of savings as well as risk-free investment for investors. Moreover, the interest on Post Office fixed deposit is predetermined and guaranteed. On the day of investment, you will know how much maturity and interest amount you will receive at the end of the tenure. We can conclude that no doubt the investment scheme is risk-free but it does not beat inflation. Hence, you must consider other Post Office investment options as well before investing and ensure your investment goal is being fulfilled.

Features of Post Office FD 

1. You can open any number of Post Office FD accounts in your own name or jointly with another account holder
2. Post office FD rates are compounded quarterly and payable annually. Further, the Government of India reviews post office FD rates every quarter. 
3. The minimum amount for deposit is Rs 1,000. Further, there is no limit on the maximum amount of deposit. However, the deposit must be made in multiples of Rs 100 only. 
4. You can invest in Post Office fixed deposits in fixed tenures only. These FD tenures are 1 year, 2 years, 3 years, and 5 years. Unlike other bank fixed deposits, you cannot invest in days or months. Here, you do not have the flexibility to choose your own investment maturity tenure.
5. You can receive the payment of interest amount in your savings account directly.
6. The 5-year Post Office FD or National Savings Term Deposit is eligible for a tax deduction under section 80C of the Income Tax Act, 1961. Section 80C of the Income Tax Act, 1961 provides a tax deduction of up to Rs 1.5 lakhs of the deposit amount. 
7. The interest on the post office fixed deposit will be taxable for the depositors. The interest is taxable for taxpayers who are less than the age of 60 years. However, interest up to Rs 50,000 is exempt from tax for senior citizens above the age of 60 years.

Eligibility for Post Office FD 

You can open the Post Office FD account by submitting an application in Form-1 to the Post Office of India. You can either visit any nearest branch of Post Office or apply by visiting the online portal. Also, remember to satisfy the following eligibility criteria to open an account:

1. A single adult can open an account
2. A joint account with a maximum of 3 joint account holders
3. Minor who is above 10 years of age can open an account in his/ her own name as well.
4. A guardian can open the account on the behalf of a minor or a person of unsound mind

Documents Required To Open a Post Office FD

You need to submit the following documents to open a Post Office account and complete KYC:

1. Identity Proof- Passport, Aadhaar Card, Voter ID, Driving Address, PAN card
2. Address Proof- Utility Bills like electricity bills, Passport, Driving Address, etc
3. Job card issued by NREGA signed by the State Government officer
4. Letter issued by the National Population Register containing details of name and address;
5. Passport size 2 photographs

Premature Withdrawal from Post Office FD Account

1. To make a premature withdrawal you need to submit an application in Form-4
2. You can withdraw after 6 months from the date of deposit. No withdrawal is allowed before 6 months. 
3. If the premature withdrawal is made after the expiry of 6 months but before 12 months then interest will be payable for the completed number of months. The interest rate will be the rate applicable to Post Office Savings Account.
4. Any interest already paid to the depositor will be recovered from the amount of repayment of the deposit and the interest payable on withdrawal.

Extension of Post Office FD Account

1. After the expiry of the tenure of each term deposit, you can extend the tenure of the term or fixed deposit.
2. The extension is limited to a period of few months. This means each investor has only a few days window to extend the tenure. After the expiry of this window, you cannot extend the tenure and compulsorily withdraw on maturity. Even if you do not withdraw on maturity you will not earn any interest further on the maturity amount. 
3. You can extend the maturity twice from the initial investment.
4. The post office FD rates for the extended maturity will be the prevailing interest rate on the date of extension. For example- The initial FD matures on 1st January 2021. You wish to extend the maturity of TD then the interest rate will be the rate prevailing on 1st January 2021 
5. You can opt for an extension of maturity at the time of making the initial payment of the deposit itself. Moreover, you can opt-out of the extension before the date of repayment.
6. You can extend the maturity by the following rule:

Pledge Against Post Office FD

• The option to pledge or transfer Post Office FD or National Savings Term Deposit as security is available.
• You must submit an application in Form-5 along with an acceptance letter from the pledgee. Form-5 must be submitted to the Post Office of India. 
• You can transfer the account to the following:

1. the President of India or the Governor of a State in his official capacity
2. the Reserve Bank of India or a Scheduled Bank or a Cooperative Society, including a Cooperative Bank
3. a public or private corporation or a Government company
4. a local authority
5. a housing finance company approved by the National Housing Bank and notified by the Central Government

You can pledge or transfer the account only if you satisfy the following:

1. To pledge an account opened on behalf of the minor, he/ she or the guardian must certify in writing that the minor is alive and that the transfer is for the benefit of the minor.
2. To pledge an account opened on behalf of a person of unsound mind, he/ she or the guardian must certify in writing that the person of unsound mind is alive and that the transfer is for the benefit of him/ her.
3. If the account is transferred as security then the authorized officer needs to make an endorsement in the record of the Account. The endorsement will be “Transferred as security to …..”.
4. Once the pledge has been uplifted the account can be transferred back. Such a transfer must be made with the previous sanction in writing of the authorized officer.  the authorized officer of the accounts office must make an endorsement to the account and certificate. Such an endorsement will be “transferred back to……”.
5. Until and unless the FD/ TD deposit  is transferred back to the original depositor, then the transferee will be deemed to the depositor
6. A blind or person with physical infirmity making him incapable of operating the account may pledge his deposit through any literate individual whom he authorizes for this purpose. 

Payment on Account of Death of Account Holder

1. In the case of the death of the single or all account holder of the deposit account, the amount in the deposit account will be payable to the nominee or the legal heir
2. If there are more than one surviving nominee or legal heirs then the deposit will be paid in the proportion mentioned in the nomination instruction. However, if no proportion is mentioned then the deposit amount will be distributed in equal proportions.
3. In case the nominee is minor then the deposit amount will be payable to the person who is appointed by the depositor for this purpose. However, if no person is appointed then the deposit will be payable to the guardian of the minor.
4. The surviving nominees and legal heirs can continue the account and receive the amount of deposit along with interest. However, there must be only 3 surviving nominees and legal heirs.
5. If the account is not continued by the surviving nominees and legal heirs then it will be closed. The amount of deposit outstanding in the account shall be repaid with interest. The interest will be paid for the period for which the deposit was in the account. 
6. In the case of the death of single or all joint holders, the surviving account holder or holders will be treated as the owner of the account. They will be deemed to be the original owners of the deposit. Moreover, such account holders may continue the account or close the account.

Types of Form for Post Office FD Account

The following is the type of Forms you need to submit to the Post Office of India for the following purposes:

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