Post Office National Savings Time Deposit (POTD) has always been a preferred option for conservative investors looking for safe investments and assured returns. Being backed by the government, it guarantees zero risk and 100% security on the deposited capital.
Currently on post office fixed deposit scheme of 5 years i.e. 60 months. 7.50% annual interest rate Is being given. The biggest feature of this post office scheme is its compounding rule—interest is calculated on a quarterly compounding basis, which increases the effective annual return.
If you are in 60 months (5 years) time deposit scheme of post office. ₹3,00,000 (three lakh rupees) If you deposit a lump sum amount of Rs., then the maturity calculation at 7.50% annual rate (compounded quarterly) will be as follows:
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Principal amount deposited: ₹3,00,000
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Applicable interest rate: 7.50% per annum (compounded quarterly)
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Total investment period: 5 years (60 months)
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Total Interest Earned in 5 years: ₹1,34,984
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Total Maturity Amount after 5 years: ₹4,34,984
That is, on completion of 5 years, you will get a guaranteed interest of ₹1,34,984 along with your principal amount of ₹3 lakh and the total fund will be around ₹4.35 lakh.
Interest in post office fixed deposits is calculated on quarterly basis. How the fund grows year after year on an investment of ₹3 lakh can be understood from the table below:
| time period (years) | Balance at beginning of year | Estimated interest for that year (7.5% compounded quarterly) | Total funds at the end of the year |
| first year | ₹3,00,000 | ₹23,143 | ₹3,23,143 |
| second year | ₹3,23,143 | ₹24,929 | ₹3,48,072 |
| third year | ₹3,48,072 | ₹26,853 | ₹3,74,925 |
| fourth year | ₹3,74,925 | ₹28,926 | ₹4,03,851 |
| fifth year | ₹4,03,851 | ₹31,133 | ₹4,34,984 |
Note: Under Post Office rules, interest on TD accounts is calculated on quarterly basis, but if the account holder wishes, he can also transfer the annual interest payable to his Post Office Savings Account.
Fixed deposit schemes of 1, 2, 3 and 5 years are available in the post office, but the benefit of tax exemption under Section 80C of the Income Tax Act is available only. 5 year time deposit It is available only.
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If you choose the old tax regime, a tax deduction of up to ₹1.5 lakh can be claimed on the amount deposited in a 5-year FD during the financial year.
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However, the interest earned is taxable and is added to your total annual income and taxed as per the slab.
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Banks/post offices follow the rules for TDS deduction if the interest exceeds ₹50,000 (₹1,00,000 for senior citizens) in a financial year.
Investing in Post Office 5 Year Fixed Deposit is very simple:
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Eligibility: Any Indian citizen can open a single or joint account for up to 3 adults. The account can also be opened by a guardian in the name of a minor above 10 years of age.
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Minimum and maximum limits: An account can be opened with a minimum of ₹1,000. There is no limit on maximum investment.
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Premature Withdrawal Rules: Withdrawals are not allowed for 6 months after account opening. If you close between 6 months to 1 year, you get interest only at ordinary savings account rate (4%). On closure after 1 year, payment is made after deducting 2% from the applicable interest rate.
For investors looking for safe capital and fixed returns, Post Office 60 month FD is an attractive and reliable option compared to bank FD.