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    India Post Office

    Department of Post, considered the backbone of India’s communications fabric, with 154866 post offices in the country, is the the largest in the world. With around 1,39,040 post offices in rural areas alone, the department is further widening its reach and functioning by diversifying into several domains such as insurance, money transfer and retail services among others.

    The Post Office Savings Bank (POSB) is the oldest and largest banking institution in the country. It operates over 238 million savings accounts. The Post Office Savings Bank schemes are a function performed by the Department of Posts on behalf of the Ministry of Finance.

    The eight savings schemes offered by the department are savings accounts, recurring deposits, time deposit, monthly income scheme, public provident fund, Kisan Vikas Patras (KVP), National Savings Certificate (NSC) and Senior Citizens Savings Scheme (SCSS).

    India Post Office Time (Fixed) Deposit Scheme

    • There are currently over 93,55,825 time deposit accounts across the country. Owing to the benefit of assured returns on the deposit and the low risk factor, it is one of the sought-after schemes in the country.
    • The scheme offers several benefits including portability of account from one post office to another and option of extending the deposit on maturity. Also, maturity proceeds not drawn are eligible for savings account interest rate for two years.
    • The tenures for fixed deposit offered range from one, two and three years to five years with the facility to draw yearly interest at compounded rates.
    • Automatic credit facility of interest to the savings bank account is available.
    • Group accounts, institutional accounts, Trust, regimental fund or welfare fund are not permissible.
    • Although interest income is taxable, TDS certificate is not issued under the scheme.

    Post Office Monthly Income Scheme

    In terms of investments that offer assured returns, fixed deposits and recurring deposits from banks as well as the postal department might be well known to people from across India. Another lucrative scheme that offers similar rates and a lot of flexibility is the Monthly Income Scheme (MIS) from India Post and is available for opening across all post offices.

    With a rate of interest as high as 8.40%, this interest is calculated on an annual basis and payable every month, allowing the account holder to avail a monthly income on his/her investment. The interest payable can be withdrawn into savings account at the same post office or if the account is at a CBS post office, the monthly income can be auto credited into any savings account at any CBS post office. The interest, if not withdrawn, will not accrue any additional interest though. The MIS account itself is transferrable to any post office across India. The account can have a maximum of Rs. 4.5 lakh as individual investment and Rs. 9 lakh as joint account investment. The maturity period of the account is five years.

    Who can open a fixed deposit account with India Post Office?

    Any individual (a single adult or two adults) can open a term deposit account.

    How to open an account?

    An individual can open an account at any head post office or general post office after filling out the deposit opening form provided by the post office. The following documents have to be furnished to facilitate the opening of the account.

    • Address and identity proof (passport, PAN card or declaration in form no 60 or 61, driving licence, voter’s ID or ration card).
    • Original identity proof for verification.
    • The individual has to choose a nominee and also get a witness signature to complete the process.

    Is the fixed deposit scheme offered by India Post available online?

    No. The scheme is not available online.

    What is the minimum amount required to open a FD account with India Post Office?

    The minimum amount needed to open a fixed deposit account is Rs. 200.

    What is the maximum amount that can be deposited in a FD account with India Post Office?

    There is no limit to the maximum amount which can be deposited in the account.

    What is the procedure to open a fixed deposit account at Indian Post Office account?

    • Account may be opened by individual by cash or cheque. If the account is opened by cheque, the date of realization of cheque will be considered as the date of opening of account.
    • Nomination facility is available at the time of opening of the account.
    • Account can be transferred from one post office to another.
    • Account can be opened in the name of any minor of 10 years and above. The minor after attaining majority can apply for conversion of the account in his name.
    • A joint account can be opened by two adults. A single account can be converted into joint account and vice versa.

    Does India Post offer tax saver fixed deposits?

    There are no specific tax saver deposit schemes. There is no tax benefit on deposits under five years. The five-year deposit is, therefore, deductible under section 80C.

    What are the main features of India post office fixed deposit scheme?

    • Offers 1, 2, 3 and 5 year time deposits. A single adult or two adults can open an account.
    • Interest is payable annually but calculated quarterly. Interest income is taxable.
    • Minimum investment is Rs. 200 and its multiples. Offers facility of extending on maturity of an account.
    • Post office time deposits are meant for investors who can deposit a lump sum for a fixed period.
    • The scheme is not only low risk but also offers high capital protection in that it is backed by the government. The investment, therefore, grows at a pre-determined rate with assured returns.
    • If inflation is above the interest rate offered, there are no high returns. The scheme is, therefore, not insulated from inflation.
    • The interest rate for a five-year deposit will be notified before April 1 every year. It is usually aligned with G-sec rates of similar maturity with a spread of 0.25%.
    • An individual can borrow against the deposit or withdraw the deposit prematurely.
    • Since the scheme is offered by the government of India, it does not require any commercial rating.
    • If a deposit is split across varying tenures, only a few deposits will lose interest in case of any premature withdrawal.

    Are loans provided against FDs at India Post Office?

    Yes. FD account can be pledged as security against a loan.

    Does India Post Office offer senior citizens any special rates on their fixed deposits?

    No. Senior citizens do not get any special rates for FD schemes.

    Does India Post impose any penalties for premature withdrawal of FD deposits?

    Premature withdrawal or closure is permitted after completion of six months of opening the deposit. The account can be closed after 6 months and before one year of opening the account, in which case, the amount invested is returned sans interest to the depositor. If a time deposit of two or three years is withdrawn prematurely, interest will be paid only for the completed years. (In case of a bank FD, if a bank imposes penalties, the depositor will be paid interest at a lower rate than what was opted for).

    Can NRIs open a FD account in India Post?

    No. Only residents of India preferably with a post office savings bank account can open a fixed deposit account under the scheme.

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