Post office – Savings account and time deposit

Apart from PPF, SCSS, PO MIS, RDs, KVP and NSC, Post office also offer the following products: Savings Account:
  • The Post Office Savings account is like a normal bank account. It can be opened by any individual, singly or jointly.
  • The minimum account balance is Rs. 50 and the maximum account balance is Rs. 1,00,000(Rs. 2,00,000 in case of a joint account)
  • The savings account earns an interest of 3.5% per annum on the minimum balance between the close of the tenth day and end of the month and is paid at the end of each year.
  • One differentiating factor is that, the interest earned on the Post Office Savings account is exempt from tax under Section 10. 
Time/Fixed Deposits: Post office Time Deposit is like a normal Bank Fixed Deposit.
  •  It can be opened by any individual, singly or jointly.
  • The minimum account balance is Rs. 50 with no maximum limit.
  • The rate of interest varies with the tenure of the deposit: 6.25%, 6.50%, 7.25%, 7.5% compounded quarterly for 1,2,3 and 5 years Time Deposit account respectively.
  • No interest is paid for the deposit withdrawn prematurely after six months but before the expiry of one year.
  • In case of deposits for two, three or five years withdrawn prematurely after the expiry of one year from the date of deposit, interest is payable for the completed years and months at 2% lower rate than specified for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.
  • 5-year deposits qualify for deduction under Section 80C.

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