Post Office Time Deposit Scheme offers the facility of investing surplus funds at relatively higher rates of interest. The deposits made under this scheme for a period of 5 years are also eligible for tax bebefits under section 80C of Income Tax Act.
The salient features of the scheme are as under:
Who can open?
Any individual singly or jointly with another adult.
An adult individual on behalf of a minor.
Minimum amount
Rs. 200/-
Maximum amount
In multiples of Rs. 50/-. No upper limit.
Maturity period
One year, Two years, Three years and Five years.
Nomination facility
Available
Interest Rate
One Year
6.25%
Two years
6.5%
Three years
7.25%
Five Years
7.5%
The interest on deposits is calculated on quarterly compounding basis and is payable annually.
Premature withdrawal
Allowed after expiry of six months from the date of deposit, subject to following conditions :
No interest is paid for the deposit withdrawn prematurely after six months but before the expiry of one year.
In case of deposits for two, three or five years withdrawn prematurely after the expiry of one year from the date of deposit, interest is payable for the completed years and months at 2% lower rate than specified for the completed period.
Deduction u/s 80C
Available w.e.f. Financial Year 2007-08 i.e. Assessment Year 2008-09 for Term Deposits of 5 year.
Interest Taxability
Taxable
Other features
A deposit can be renewed with retrospective effect, subject to the following:
