What Is Post Office Time Deposit Scheme? Know Withdrawal Rules, Maturity & Other Features
Post Office Time Deposit Scheme is a short-term investment avenue that allows senior citizens to grow their money while staying liquid.
Post Office Time Deposit Scheme is a short-term investment avenue that allows senior citizens to grow their money while staying liquid.
Post Office Time Deposit Scheme
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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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Also Read: Section 80CCD: How Much Deduction Does It Allow For NPS And APY Subscribers
Here are some key features:
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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.
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.
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.
Also Read: 6 Drawbacks Of Senior Citizens Savings Scheme (SCSS) You Should Know
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.
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These small finance banks offer 9 per cent or higher interest rates on fixed deposits for senior citizens. Read on to learn more
RBI’s UDGAM portal allows customers to check their unclaimed deposits with banks; it has enrolled 30 banks from the initial seven during its launch in August 2023
At around 7.5 per cent to eight per cent interest rates, it seems to be the most favourable rate scenario for senior citizens across fixed deposits and small savings schemes.
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