The Post Office Time Deposit Scheme is a short-term investing avenue with a lock-in of one, two, three, or five years. It provides quarterly guaranteed interest income. The minimum investment limit in the scheme is Rs1,000, with no maximum ceiling. Deposits can be made in cash or cheque. Payments over Rs 20,000 are accepted via cheque. 

Post Office Time Deposit Scheme accounts can be opened individually or by a group of up to three people. These accounts can also be opened on behalf of children; however, the parents or their legal guardians will have to manage them until the child reaches adulthood. Also, an individual can open multiple accounts under the Post Office Time Deposit Scheme. 

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Here are some key features: 

Eligibility 

Post Office Time Deposit accounts can be opened by anyone over 10 years old or guardians on behalf of a minor. Up to three individuals can hold accounts jointly, and depositors can nominate a person before or after opening an account. One of the main benefits of time deposit is the ability to create multiple accounts without restrictions and transfer them between post offices. 

Lock-In & Interest Rate 

The Post Office Time Deposit Scheme has lock-in periods of one, two, three, and five years, with the option to extend the tenure through a formal application to the post office. A five-year post office time deposit account provides income tax benefits of up to Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961. The scheme provides a maximum interest rate of 6.7 per cent. 

Extension 

The depositor can extend their time deposit account after maturity. The extension period can be six months, 12 months, or 18 months. The request for account extension must be made by submitting an application form, the required documents, and the Post Office passbook after maturity. The interest rate on the maturity day will apply to the extended period. 

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Premature Exit 

One cannot withdraw the deposits six months before opening the account. If the time deposit account is closed after six months but before a year, the post office savings account interest rates will apply. For instance, if a two-, three-, or five-year account is prematurely closed after a year, the interest will be calculated at 2 per cent lower than the time deposit interest rate for completed years and post office savings interest rates if closed before a year.