Post Office FD Interest Rates 2021: Check Latest Post Office Fixed Deposit Interest Rate

Gaurav Seth
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Gaurav Seth

Post Office Fixed Deposit Interest Rates

The Department of Post (DoP) operating by the name of IndiaPost is a government-backed postal services entity which is a subsidiary of the Ministry of Communications. It offers its services through a wide network of post office branches across the country. Postal services in India is the most widely networked postal system in the world. Currently, there are over 1.54 lakh post office branches across the country, out of which 1.39 lakh are located in rural India.

Along with Postal services, the Post office also provides Banking Services under the name India Post Payment Bank, which has its operations in the Post office branches. Post Office also provides savings schemes under the name Post Office Saving Schemes.

Post Office FD Rates:

Post Office fixed deposit (FD) offers different interest rates depending upon the tenure of the FD. Tenure varies from 1 year to 5 years. Unlike other banks, Post office does not give any special interest rates for senior citizens.

Interest rates on Post Office Time Deposit account for different tenures are:

1 year5.5%
2 year5.5%
3 year5.5%
5 year6.7%

Features of Post Office FD

  • Post Office FD scheme is generally known as Time Deposit.
  • In a Post office FD account, the interest is payable annually but it is calculated on a quarterly basis.
  • There is no maximum limit for FD, but the minimum limit is ₹ 1,000 and in multiples of ₹ 100 thereafter.
  • On maturity, the depositor can further extend the TD/FD account for another tenure.

Benefits of Post Office FD

  • It is one of the safest modes of investment as it is backed by the Government of India.
  • It offers an attractive rate of FD as compared to other investment opportunities.
  • A TDS(Tax Deducted at Source) at the rate of 10% is charged on the interest earned on a post office FD account. However, investors can avail the benefits of “No TDS deduction” by submitting the Form 15G with necessary declaration at the beginning of the financial year.
  • There are no changes in the interest rates of existing FD holders due to change in the interest in the economy.
  • Depositors can also pledge or transfer their FD as a security with different institutions like banks, housing finance companies, public/private companies & other local authorities too.

Types of Post Office FD

There are no types of Post Office FD currently. It only offers a Time Deposit as Fixed Deposit scheme, with different interest rates depending upon the investment tenures. Also, there is no additional interest rate benefit for senior citizens.

Premature Closure of FD

  1. No withdrawal can be done before the expiry of 6 months from the date of deposit.
  2. Post Office saving account interest rate will be applicable if the FD is closed after 6 months but before 1 year.
  3. For FDs with maturity of 2,3, or 5 years closed prematurely after 1 year, an interest rate 2% less than FD rate should be calculated for the completed years.

FD can be closed prematurely by submitting an application form with a passbook at the concerned post office. 

Tax Benefits in Post Office FD

Post office offers tax benefits for FD with a maturity of 5 years. The invested amount is eligible for tax deductions of upto ₹ 1.5 lakh in a financial year under Section 80C of the Income Tax Act,1961.

Eligibility of Post Office FD/ Who can open Post Office FD?

  • Any Indian Resident Single adult.
  • Minor above the age of 10 years.
  • For Minors less than 10 years old, an account may be opened by a Legal guardian.
  • A person of unsound mind, an account can be opened by a Legal Guardian.

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