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Post office Time Deposits

Term Deposits with Post office, Money and FinanceA post office time deposit account is a service that is similar to a bank fixed deposit. Time deposits can be made for a period of 1 year, 2 years, 3 years and 5 years. The minimum investment in a post-office Time deposit is Rs 200 and then its multiples and there is no prescribed upper limit on your investment. Any individual can open an account, whether singly or jointly with another person. Account can be opened on behalf of a minor or a person of unsound mind. Even more than one account can be opened without any limit.

The account can be closed after 6 months but before one year of opening the account. On such closure the amount invested is returned without interest. 2 year, three year and five year accounts can be closed after one year at a discount. They involve a loss in the interest accrued for the time the account has been in operation. Interest is payable annually but is calculated on a quarterly basis at the prescribed rates. Post maturity interest will be paid for a maximum period of 24 months at the rate applicable to individual savings account. With the amount in the account of a time deposi pledged as security, one can also avail a loan.

Interest on Time Deposits

Interest on time deposits is payable as under:

Deposit made from 1.3.2003 onwards

1st year 6.25%
2nd year 6.50%
3rd year 7.25%
5th year 7.50%


TAx Savings, Money and FinanceNot permitted before 6 months. No interest is payable if deposit is withdrawn after 6months but before 1year. If deposits made for 2years, 3years or 5years are prematurely withdrawn after one year, then interest shall be payable at a rate 2% less than the rate applicable to the period for which the deposit has run.

Income Tax Benefit on Time Deposit

Amount invested in 5years POTD, alongwith PPF/LIC/NSC/ULIP, etc. upto a maximum of Rs. 1,00,000 is eligible for deduction u/s 80C. In case of deposit under joint holding, deduction u/s 80C shall be available to the first holder.

How to start a Time Deposit

A Time Deposit account can be opened at any post-office in the country. Account may be opened by an individual, i.e., Single, Joint A/B (not more than two adults) Trust, Regimental Fund and Welfare Fund. On opening a Time Deposit, you will receive an account statement stating the amount deposited and the duration of the account. The account can be closed after 6 months of opening the account. On such closure the amount invested is returned with/without interest depending on the time the deposit was maintained.

Post Office Time Deposit Account in Brief

Duration & Rate of interest

One year  6.25%

Two year  6.50%

Three year 7.25%

Five year  7.50%

II.  Where to Invest ?

In any Head post office/Sub post office

III.  Who can invest ?

(i).    An individual(Above 18 years)

(ii).   A  minor who has attained the age of 10 years.

(iii).   A guardian on behalf of a minor / a person of unsound mind.

(iv).  Two individuals

IV.   How much to invest?

Minimum - Rs. 200/-

Maximum – No limit

V. Withdrawals

Principal – Only after the expiry of the   period for which it is made.

     (i).     On Maturity

Interest -   At the end of each year during  the period of deposit.

    (ii).      Premature

(i).    After 6 months upto one year without interest


(ii).    After one year, interest shall be paid two percent less.

VI.   Nomination facility


IX.   Tax benefits

 (i).   No deduction of income tax at source.

(ii).    Tax exemption on Five Years Time Deposit Account U/S 80C of the IT Act.



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