Post Office Fixed Deposit is an investment that can be deposited in post office to earn interest. The time period for these fixed deposits are one year, two years, three years and five years. This scheme of post office is utilized more as compared to bank deposits in rural areas. The interest rates under this scheme currently varies from 6.9% to 7.7%. By investing in this deposit scheme one can get taxation benefits under section 80C. The interest that is paid is charged with Tax Deduction at Source (TDS).
The major benefit of post office deposit scheme is saving tax. Tax deductions are allowed under section 80C of the income tax act for the interest from post office deposit scheme. The deductions are only allowed on the investments if they are made for time period of five years. The maximum of Rs 1,50,000 can be claimed as a tax deduction by the taxpayer under this section. The interest that is paid in this scheme is subject to tax deduction at source. If TDS is not deducted it is to be clearly declared in the return of income filed by the taxpayer.
For senior citizens of India, the interest received from post office fixed deposits will be tax exempt. The interest income that is exempt from taxation for them is maximum upto Rs. 50,000 under section 80TTB of the income tax act.
Post Office Fixed Deposits is mostly adopted by those individuals who are conservative in regard to risk of their investments. The individuals who gives more importance to safety of the investment and are against of taking risk, this type of investment is ideal for them. The rates of this fixed deposit is sometimes higher than that of bank fixed deposits. The rate of interest in this scheme depends on the time period the investor choose. The longer the time period the higher will be its rate of interest. So the major decision for opening a fixed deposit in post office is to decide the amount as well as the time period for which the amount is to be invested in the post office. The interest somewhere comes in between a bank fixed deposit rate and a company’s fixed deposit rate.
In the era of internet, the application of Post Office Deposit Scheme can be done online easily. The steps of application of this scheme offline is as follows:
Government keeps on revising the rate of interest for post office fixed deposit scheme. The interest rate that is effective from first january 2019 on the basis of yield on Government securities are as follows:
|Time period||Rate of interest (%)|
Any individual who is a resident of India can open a fixed deposit account in post office. Non Resident Indians are not allowed to open a fixed deposit account in post office. The depositor can open a fixed deposit account by cash or cheque. The date on which the cheque is realized is the date of the opening of the account in Government records. This investment features low risk and steady incomes. This also gives protection to the capital and ideal for people who are retiring or retired.
The post office fixed deposit is one of the most safe and protected ways of making investments. The major features of this deposit scheme are:
For a safe and secure investment individuals can opt for post office fixed deposit scheme. This deposit scheme is offered by post office for various time periods at ideal interest rates. Under section 80C of the income tax act the interest received is exempt from taxation with certain terms and conditions and maximum limits. The post office fixed deposit is risk free and mostly opted by rural area people.
Ans. Yes, the post office fixed deposits are taxable for the interest paid, but the tax deduction at source is not done by the post office. One can save the tax by opting maturity period of five years for the deposits and get exemption from taxation maximum upto Rs 1,50,000.
Ans. All the residents of India except NRIs (Non Resident Indians) can open a post office deposit account.
Ans. The fixed deposit account of post office can be opened with a minimum of Rs 200 and there is no limitation of maximum amount for the same.
Ans. The depositor can opt for various tenures for depositing money in fixed deposits of post office. It can be deposited for one year or two year or three year or five years as per the convenience.
Complete guide covering all the basic tax related terms. So, that tax terms will not work as a road-stopper in your way!!
Comprehensive Guide containing all Information that you must know while filing of your ITR for FY 2018-19 (AY 2019-20).
Free Income Tax Calculator for Assessment Year (AY) 2018-2019 and AY 2017-2018 with new budget changes.
Calculate HRA exemption based on your salary for AY 2018-19. Make accurate calculations of HRA for employees.
Hire smartest eCA's to File Your Income Tax Return. CA Assisted Filing of ITR. File your Income Tax Return with confidence and ease.
Tax2win is an efiling portal to prepare and efile income tax return Online. Tax2win helps individuals to file their income tax return.