Fixed Deposits (FDs) have been a popular investment choice for many people over the years due to their assurance of guaranteed returns. Post Office FDs, also known as the Post Office Time Deposit (TD) Scheme, offer investment options with tenures of one, two, three, and five years.
The five-year FD, often referred to as a post office tax-saving FD, falls under the Exempt-Exempt-Exempt (EEE) category. This means that the invested amount, the interest earned, and the maturity amount under this scheme are exempt from taxes. Investments of up to Rs 1.5 lakh in the five-year post office FD qualify for tax benefits under Section 80C of the Income-Tax Act (ITA) of 1961.
Moreover, it offers the highest interest rate of 7.5% among all other post office FDs. The interest earned on this FD is payable annually but calculated quarterly. Post Office Tax-Saving FD: For instance, if you invest Rs 10 lakh in the five-year post office FD and receive 7.5% interest on the amount over five years, you would earn a total interest of Rs 4,49,948, resulting in a maturity value of Rs 14,49,948.
National Savings Time Deposit Account Scheme: This government-sponsored post office FD scheme provides interest returns payable annually and compounded quarterly. The minimum investment limit is Rs 1,000, with multiples of Rs 100 thereafter.
There is no maximum return threshold. Interest rates vary from 6.9% to 7.5% for FDs with different durations, with rates for one, two, three, and five-year FDs being 6.9%, 7%, 7.1%, and 7.5% respectively. Tax Benefits:
The five-year FD scheme offers tax benefits of up to Rs 1.5 lakh under Section 80C of the ITA, 1961. However, interest payments exceeding Rs 50,000 for senior citizens and Rs 40,000 for other depositors are subject to tax deducted at source (TDS). Eligibility Criteria: Adults can open and manage an account individually or jointly with up to three people. Additionally, the post office also accepts accounts in the name of minors, with a legal guardian managing the account until the minor turns 18.
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