Post Office Special FD Schemes

The Indian Postal Service is one of the most widely spread postal systems in the world. Recently in 2015, the RBI granted approval to the Indian Postal Service to offer a number of banking related instruments to the people.

Special Fixed Deposit Schemes offered by Post Offices

Since 2016, all post offices in India provide the following plans and saving schemes:

Small Savings Scheme
Senior Citizens Savings Scheme (SCSS)
National Savings Certificates (NSC)
Public Provident Funds (PPF)
Monthly-income Plans
Postal Life Insurance (PLI)
Time Deposit Schemes
Post Office Savings Account
5 Year Post Office Recurring Deposit Account
Kisan Vikas Patra
Sukanya Samriddhi Account

Such schemes are also known as special schemes and can be opened in any of the post office branches across India.

Post Office Fixed Deposit Scheme

This is a simple fixed deposit scheme with attractive rate of interest and a wide range of benefits. Similar to a regular bank FD, the interest rate for each tenure for post office fixed deposit is fixed. The interests are paid annually but compounded quarterly. The minimum amount required to open this deposit scheme is Rs. 200 with no such limit on the maximum amount.

Post Office Time Deposit Account

This is a fixed deposit which can be opened by any individual. Under this scheme, you are required to deposit a certain amount of money into the account and the interest is earned depending on the term of the policy and interest rate. This deposit has a maximum investment period of 5 years and you can easily close the account on a premature basis. Mentioned below are the interest rates with effect from 01.01.2019:

Tenure (in months)	Rate of Interest (per annum)
Rate of Interest (per annum	7.0%
24 months	7.0%
36 months	7.0%
60 months	7.8%

Features of Post Office Special FD Schemes

The features of Post Office Special FD Schemes are:

You can open any number of FD accounts across post office branches.
The FD account comes with a tenure of 1-5 years.
Minors aged 10 years or more can open this account as well.
Account can also be opened on a joint basis.
The account can be transferred from one post office to another.
Nomination facility is available.
The account can be opened via cheque or cash.
Facility of automatic renewal is available.

Benefits of Post Office Special FD Schemes

The benefits of Post Office Special FD schemes are:

Post office deposit schemes are backed by the government and come with guaranteed additions.
In case the inflation rate is below the TDS interest rate, you will earn more.
Higher rate of interest (7.0% to 7.8%).
Liquidity - You have the facility to make a premature withdrawal post the lock in period.
These are risk-free investments as they provide complete returns on maturity.
You can claim a tax deduction of up to Rs. 1,50,000 under Section 80C of the Income Tax Benefit, 1961.

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FAQs on Post Office Special FD Schemes

How can I break my FD in post office?

You will have to physically visit the branch and submit a declaration regarding premature withdrawal of your FD account.

Is Post Office FD taxable?

Yes, the interest paid is taxable, but TDS is not deducted by the post offices.

What is the process of FD in post office?

Simply visit the branch office and fill the application form for opening a new FD account. Submit the form and deposit the requested amount.

Is TDS deducted on the Post Office FD?

No, TDS is not deducted by the post office.