Post Office Scheme : The RBI has recently cut the repo rate for the third consecutive time. With this cut, the repo rate has fallen by 1 percent. It was expected that the RBI would cut the repo rate by 0.25 points this time. However, the RBI (RBI latest update) has surprised by reducing it by 0.50 percent. After this decision by RBI, banks have started reducing interest rates on loans and FDs.
While this repo rate cut has given relief to loan holders, it has been a big blow for investors (Investment tips). Still, there are some schemes that are offering higher interest rates. If you are planning to invest, right now post office schemes are offering more interest than FD. Let’s understand in detail.
Get maximum benefits from this scheme
Due to the fall in FD interest rates, senior citizens (Scheme for Senior Citizens) have faced bigger losses. If you too are worried about low interest on FDs, you don’t need to worry anymore. Today we will tell you about a wonderful savings scheme from the Post Office (Post Office Saving Scheme). This scheme is known as the Post Office Time Deposit (TD) Scheme. By investing in this scheme, you can earn higher interest rates than bank FDs.
What is the Post Office Time Deposit (TD) Scheme?
This is a fixed deposit scheme operated by the Post Office. In this scheme, you can invest for 1, 2, 3, or 5 years. Since this scheme is backed by the Government, it is completely safe (Investment in Fixed Deposit) and reliable.
Interest Rates under Post Office Time Deposit Scheme
| Tenure | Interest Rate |
|---|---|
| 1 Year | 6.9% per annum |
| 2 Years | 7.0% per annum |
| 3 Years | 7.1% per annum |
| 5 Years | 7.5% per annum (eligible for tax exemption under 80C) |
Who can invest?
Any adult citizen of the country can invest in this scheme (Investment Scheme). Up to three adults can jointly open an account and invest together. Parents can also invest in this scheme on behalf of their children.
Minimum and Maximum Investment
Investment in this savings scheme can start from as little as ₹1,000. You can increase the amount in multiples of ₹100. There is no maximum investment limit in this scheme. Interest is paid annually. Investments in the 5-year TD qualify for tax exemption under Section 80C of the Income Tax Act.
Extension of Account after Maturity
- 1-year TD: can be extended within 6 months
- 2-year TD: can be extended within 12 months
-
3-year & 5-year TD: can be extended within 18 months
The request for extension can also be made while opening the account. For extension, an application form and passbook must be submitted to the respective post office. The original interest rate applicable on the maturity date will continue for the extended period.
Premature Withdrawal
Withdrawal is not allowed before 6 months from the date of opening the account. If the account is closed between 6 months and 1 year, then the Post Office Savings Account interest rate will be applicable.