Investment in Post Office Time Deposit Account (POTD) for A.Y. 2022-23 & 2023-24

Investment in Post Office Time Deposit Account (POTD)

Is one of the most well-known investment schemes offered by the India Post. While the scheme is open to all individuals, it is particularly popular in rural and remote areas of the country that are relatively under-banked and have limited access to investment products.

Post Office Time Deposit Scheme Interest Rates

The Indian Finance Ministry reviews the interest rates on the scheme in the beginning of every quarter of the financial year. The interest rate is decided based on the yield on Government securities and usually has a spread over the Government-sector yield.

Following are the interest rates of the post office time deposit account applicable from 1 st.  Jan 2019 to 31st. March 2019:

Account Tenure Applicable Interest Rate
1 Year 5.50%
2 Year 5.50%
3 Year 5.50%
4 Year 6.70%

In case you do not wish to withdraw the interest annually, you can instruct the post office to redirect it to your post office savings account, that earns 4% interest p.a. However, this cannot be done in case of POTD with 1 year tenure.

Alternatively, you may also choose to redirect this interest to 5 years recurring deposit account in the same post office or bank in lieu of payment of 12 monthly installments. In this case, the depositor will be required to give a fresh application to the office or bank before the due date on which interest falls due for payment.

Features of Post Office Time Deposit Scheme

  • Deposits under post office time deposit schemes can have tenure of 1, 2, 3 or 5 years, and only one deposit can be made in one account.
  • This post office scheme promises assured returns on the account holder’s investments.
  • The time deposit accounts can be easily transferred from one post office to another.
  • Time deposit accounts can he either solely operated or jointly held.
  • Account holders can extend the duration of a time deposit account upon its maturity.
  • If proceeds of a mature account are not withdrawn, the account will be automatically renewed for the original deposit tenure at applicable interest rates as on the date of maturity.
  • There is no cap on the number of time deposit accounts that can be opened.
  • Minimum deposit required to invest in the Post Office Time Deposit scheme is Rs. 200. However, it must be noted that the amount to be deposited should be in multiples of Rs. 200 only. If not, the amount in multiples of Rs. 200 will be retained in the account and the balance will be refunded without any interest.
  • The Central Government has recently authorized all public sector banks and some private banks like ICICI Bank. Axis Bank, and HDFC Bank to allow investors to open POTD accounts.
  • Investors may consider POTD investments as alternates to Bank Fixed Deposits.
See also  Investment in TERM LIFE INSURANCE for A.Y. 2022-23 & 2023-24

Eligibility Criteria

In order to be eligible to open a Post Office Time Deposit Account, the following criteria must be taken into account-

  • All resident Indians can open and operate this account either singly or jointly.
  • A minor aged 10 years or more can open and also operate this account.
  • A parent/guardian can open a Post Office Time Deposit account on behalf of a minor.
  • Non-resident Indians are not allowed to open a Post Office TD account.

The following groups/funds are not allowed to avail the Post Office Time Deposit Scheme-

  • Institutional account holders.
  • Trust funds.
  • Regimental funds.
  • Welfare hinds.
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