Investment under five years fixed deposit qualifies for benefit under Section 80C of the Income-Tax Act

The Department of Posts, run by the government, offers nine saving schemes with interest rates ranging from 4 per cent to 8.4 per cent. Post office time deposit and post office recurring deposit are two of the saving schemes that offer between 6.9 per cent- 7.8 per cent, said India Post. The rates of return on post office time deposit, also known as a fixed deposit, vary according to the tenure of the account while the interest rate on recurring deposits is fixed at 7.3 per cent per annum, according to indiapost.gov.in.

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Given below are features of post office fixed deposit, post office recurring deposit:



Post office fixed deposit

The post office fixed deposit, which can be opened for varying tenures, can be opened by an individual via cash/ cheque. You can open any number of fixed deposit accounts and also transfer them from one post office to another.

(Also Read: These Investment Schemes Guarantee Fixed Returns)

In the fixed deposit account, you need to deposit a minimum of Rs 200 and in multiples thereof. There no maximum limit on the deposit.

The account can also be opened in the name of a minor. Any child above the age of 10 can operate the account. However, minors have to apply for conversion of the account in their name after attaining majority. A single fixed deposit account can be converted into a joint one and vice versa.

A nomination facility is available at the time of opening the fixed deposit and also after opening of the account.

Investment under five years fixed deposit qualifies for benefit under Section 80C of the Income-Tax Act.

Post office FD rates 2018



Period Rate 1 year A/c 6.90% 2 year A/c ?7.0% 3 year A/c 7.20% 5 year A/c 7.8?%

Post office recurring deposit

Post office recurring deposits can be opened via cash/ cheque and can also be transferred from one post office to another. A nomination facility is available at the time of opening and also after opening of the account.

You need to deposit a minimum of Rs 10 per month or any amount in multiples of Rs 5. There is no maximum limit on the deposit in the account.

You can open any number of recurring deposit accounts in any post office. Post office recurring deposits can be opened in the name of minors and a minor above 10 years of age can open and operate the account. Two adults can open a joint account.

Subsequent deposits in the recurring deposit account can be made up to the 15th day of next month if the account is opened up to the 15th of a calendar month and up to the last working day of next month if the account is opened between 16th day and the last working day of a calendar month. If subsequent deposit is not made up to the prescribed day, a default fee is charged for each default.

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If you make advance deposit of at least six installments, you get a rebate. A single account can be converted into a joint one and vice-versa.

A minor after attaining majority has to apply for conversion of the account in his name.

(Also Read: How To Open Post Office Savings Account: Interest Rates, Tax Benefits, Other Details)

Post office RD interest rates 2018

Post office RD accounts fetch 7.3 per cent per annum interest, which is compounded quarterly. A deposit of Rs 10 per month in the account fetches Rs 725.05 on maturity. The recurring deposit account can be continued for another five years on a year-to-year basis.