Post Office - Time Deposit (PO TD)
This page provides all the details you need to know about Post Office Time Deposit (PO TD) scheme.
Table of Contents
What is TD?
TD stands for Time Deposit.
TD is nothing but a Fixed Deposit or Term Deposit account.
In this scheme, the interest is paid annually.
How does TD work?
Deposit a lump sum amount for specific tenure
You will receive interest every year till the end of the tenure
At the end of the tenure, you will get your deposit amount back
Features
Backed by the Government of India
Safe investment option
Guaranteed returns
Helps you to invest as little as Rs. 1,000 thereby encourages the habit of investment
Income Tax Benefits
Effective 01-Apr-2020, the income tax benefits will depend upon whether you choose old tax system or new tax system.
Old Tax System:
The deposit amount (up to Rs. 1.5 Lakhs) under 5 Years TD will qualify for tax deduction under Section 80C of the Income Tax Act.
This means that there is no tax deduction benefit for deposits under 1 year, 2 years or 3 years TD account.
No TDS (Tax Deducted at Source) under this scheme by Post Office.
Interest received under this scheme is taxable. You need to declare the interest income under "Income from Other Sources" during tax returns and pay the income tax as per your income tax slab.
New Tax System:
No income tax benefits. The deposit amount won't get any deduction benefit under Section 80C of the Income Tax Act.
No TDS (Tax Deducted at Source) under this scheme by Post Office.
Interest received under this scheme is taxable. You need to declare the interest income under "Income from Other Sources" during tax returns and pay the income tax as per your income tax slab.
Who can open the account?
Only Indian residents can open the TD account.
TD account can be opened by
an adult for himself
an adult on behalf of a minor or a person of unsound mind of whom he is the guardian
a minor who has reached the age of 10 years
joint account by up to 3 adults
You can open more than one account in your name or jointly with another person.
How do you open the account?
Account can be opened by cash or cheque.
In case of cheque, the date of realisation of cheque in the account will be the date of account opening.
Any number of accounts can be opened in any Post Office.
Deposit Limits
Minimum deposit amount is Rs. 1,000.
No maximum limit for deposit.
Deposit amount should be in multiples of Rs. 100.
Term
You can choose one of the following 4 options.
1 year
2 years
3 years
5 years
Interest Rate (%)
The current annual interest rate for various tenure are given below.
| Term | Interest Rates (%) |
| 1 year | 6.90% |
| 2 years | 7.00% |
| 3 years | 7.10% |
| 5 years | 7.50% |
Interest is paid on an yearly basis.
Interest rate (on the day of account opening) will remain the same throughout the tenure of TD. It will not change even if there are changes to the interest rate thereafter.
From 01-Apr-2016, the interest rates of this scheme have been announced on a quarterly basis. Note that it used to be on a yearly basis earlier.
Compounding Frequency
Quarterly compounding frequency is followed in this scheme. But, interest amount will be paid to you on a yearly basis.
Auto-Renewal Facility
In CBS (Core Banking Solution) Post Offices, when the TD account is matured, it will be automatically renewed for the period for which it was initially opened.
For example, 2 Years TD account will be automatically renewed for 2 Years. 1 year TD account will be automatically renewed for 1 year.
Interest rate for the auto renewed TD account will be the interest rate on the day of maturity.
Pre-Mature Closure
If the TD account is closed before 1 year, then the Savings Bank (SB) account interest rate will be paid for the duration for which TD account was kept.
Account Conversions
Single account can be converted into joint account and vice versa.
Minor, after attaining majority, has to apply for conversion of the account in his name.
Account Transfer
TD Account can be transferred from one Post Office to another Post Office.
Nomination Facility
Nomination facility is available.
You can nominate either at the time of account opening or after opening the account (but before maturity).
NRI and HUF
NRI (Non Resident Indians) and HUF (Hindu Undivided Family) can not open the account.