There are four options for investing in the Post Office Time Deposit Scheme. Interest is paid annually under the Post Office Time Deposit Scheme. Those who invest in Post Office Time Deposit are eligible for tax benefits. Premature withdrawal before six months is not allowed in this scheme.
Post Office Time Deposit: Fixed deposits are a great investment option for investors looking for guaranteed returns. Post offices offer investors a time deposit scheme, also known as post office FD. Here you can invest a lump sum. There are four options for investment in the post office time deposit scheme. 1 year, 2 years, 3 years and 5 years, with interest rates ranging from 6.9 per cent to 7.5 per cent. Under post office time deposit, opening a joint account with a maximum of three persons is allowed.
If you invest in the post office time deposit scheme for five years, you will get a return of 7.5 percent on maturity. You need to invest a minimum of Rs 1,000 in this scheme.
How much interest will you get?
Under the Post Office Time Deposit Scheme, interest is paid annually. If you invest Rs 5 lakh for five years at the current interest rate of 7.5 per cent, you will get Rs 2,24,974 as interest. You will get Rs 7,24,974 on maturity.
Tax Benefits
Investors in post office time deposits are eligible for tax benefits. Investments held for a minimum period of 5 years are eligible for a deduction of up to Rs 1.5 lakh per year under Section 80C of the Income Tax Act. This reduces the tax liability. Apart from this, there is also an option to carry forward the investment account after maturity.
Premature withdrawal before six months is not allowed in this scheme. If you choose to close the account between 6 months and 1 year from opening the account, the applicable interest rate will be equal to that of a savings account and not that of an FD scheme.
