Among different types of savings accounts which are offered by Indian financial institutions, FD is a popular choice for investors owing to the numerous advantages offered by such schemes.
As an investment option, FD accounts offer a steady return over the maturity term. Additionally, such accounts do not run the risk of loss or even of being affected by market fluctuations, making them a safe investment option.
While there are many financial institutions which offer FD accounts, post office FDs continue to be a popular choice. Resultantly, it is important that potential investors note the post office FD rates.
The rates of interest which are offered on the basis of maturity tenor are listed below:
- 6.9% interest for a tenor of 1 year per annum.
- If the tenor goes up to 2 years, the rate of interest remains at 6.9% per annum.
- Even for a maturity tenor of 3 years, the interest rate stays at 6.9% per annum.
- Investors cannot invest for a duration of 4 years. Instead, they can invest for a period of 5 years to accumulate gains at 7.7%.
Post office fixed deposits have a few specific norms which vary from FDs offered by financial institutions. These regulations are not the same as that of other accounts are mentioned below.
- Post office FD rates accrue interest on a quarterly basis.
- Interest income is paid annually.
- The minimum amount that must be invested begins at Rs.1,000.
- The investment amounts must be in multiples of Rs.100.
- Joint accounts can be opened by 3 individuals.
- Facility to choose a nominee is offered not just while opening the account, but also later.
- One individual can invest in multiple FD accounts.
- Interest accumulated on a fixed deposit account can be credited to the savings deposit account.
- Senior citizens can avail tax exemptions on the interest earned on their investment up to a sum of Rs.50,000.
- Under section 80C of Income Tax Act of 1961, tax exemptions can be availed by investors up to a sum of Rs.1.5 lakh for investments with maturity tenor of 5 years.
Who can invest in post office FD accounts?
While checking the rates of interest offered by post offices on their FDs, potential applicants should also check the different requirements which must be fulfilled to successfully invest in such an account. Both eligibility and document requirements are discussed below in detail.
- Eligibility criteria to open an FD account at the post office
Much like post office FD rates, the eligibility criteria for such accounts are also quite simple, viz. –
- Applicant(s) must be a citizen of India.
- Minimum age of the applicant must be 10 years, thereby even allowing minors to avail such an account.
- Guardian of a child can invest in their name.
- Guardians of any specially-abled person can also invest in their name.
NRI individuals cannot invest in post office FD accounts. Such individuals should consider investing in FDs offered by other financial institutions which offer NRO accounts. Additionally, they should also use a fixed deposit calculator to check the returns they can expect on their investment.
- Documents required to invest in post office FD
The documents which must be produced by an applicant to invest in a post office fixed deposit account include –
- Filled in form for FD accounts from the post office branch where one wants to open his/her account.
- 2 passport-sized photographs of the applicant.
- KYC documents of the applicant. This should contain both personal details and address details of the applicant.
The application procedure for the FD account is quite simple since the filled up form can be submitted at the concerned branch to complete the process. However, applicants must also keep in mind that they must have a witness sign their form before submission.
Investors should also check the offers from other financial institutions since many of them offer a higher rate of interest than that of post office FD rates. FD accounts are secured by the Government with coverage of up to Rs.1 lakh in FD investments in case the concerned financial institution fails. As a result, FDs are considered a safe investment option for retirement since they offer steady substantial returns.
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at HighlightStory