You can invest in a Post Office FD if you have a checking account with the Indian government’s Department of Posts and Ministry of Communications. Similar to other fixed deposits, this one also has similar advantages and functions. The interest earned from this FD is determined by the interest rates that were in effect at the time of investment for the specific tenor. Depending on the investment tenor you select, you can earn interest during that time. Additionally, the Post Office FD gives protection for both your investment amount and returns, exactly like a traditional fixed deposit. Post office FD interest rates stay between 6% and 7% per annum. 

Post office FD interest rates:

The Government of India determines post office FD interest rate 2023 under its ‘Small Saving Schemes.’ In reality, these rates are set based on how well government bonds or bills perform. A five-year post office fixed deposit carries a 25 basis point interest rate premium above the yield of equivalent government securities.

Here is the list of post office FD interest rate 2023-

According to Section 80C Income Tax Act of 1961, you may claim tax benefits. This is possible if you open a fixed deposit with the post office for a duration of 5 years.

Advantages of post office fixed deposits:

• Guaranteed returns- The post office fixed deposit is one of the safest investment options because it is a government-backed savings program and guarantees annuity returns.
• Considerable interest rate- The interest rate on post office fixed deposits is between 6% and 7%. POFD’s interest rate is more likely to produce higher returns in comparison to other investment plans. 
• No volatility- The returns offered by post office fixed deposits, one of the safest investment options, are unaffected by changes in the market. This shows that despite market volatility, investors continue to earn the same interest rate.
• Other facilities- The POFD plan enables investors to take advantage of interest income tax exemption. Additionally, consumers have the option to prematurely withdraw their investment and borrow against the value of their post office fixed deposit plan.

Eligibility criteria:

Any Indian resident may open an individual or joint POFD account. Minors can invest in the post office fixed deposit program, which is run by their legal guardian. NRIs, businesses, and trusts cannot invest in this.

Documents required:

Keep these documents close at hand when opening a post office FD account-

• Address proof- Bank statement, telephone bill, electricity bill, post-office-issued ID, or Passport.
• Identity proof- Driving license, voter ID, Aadhaar card, PAN card.

The subscriber must also include the beneficiary’s information for the FD. The subscriber must have a witness present when signing the investment paper.

How to invest in post office fixed deposits?

An individual can open a Post Office fixed Deposit account using either an online or offline method.

Mobile banking method:

• Install the Indian Post Mobile Banking app on your phone.
• Use the credentials to log into the application.
• Click on the requests tab on the home screen to access the Post Office FD account.
• Enter the necessary information, such as the tenure, beneficiary, amount, the account from which you want to make the deposit, etc., to open the account. 

Offline method:

• Visit the closest post office and complete the application with the necessary information. The form is also available for download on the postal service’s official website.
• Provide the application form and the required supporting documents.
• Visit the post office location where your savings account was started.
• Hand the form and necessary paperwork to the appropriate employee to open the account. 

A popular investment choice for a secure investment route is a post office FD. These FDs are similar to normal FDs. These post office FDs are supported by the Indian government’s sovereign guarantee. This FD is perfect for you if you seek a guarantee and security. Moreover, the  FD interest rates will help you grow wealth over time. 

Types of post office tax saving deposits:

The 5-year Post Office FD is eligible for a deduction under Section 80C up to a maximum investment of Rs. 1,50,000. In addition, you might think about various alternative Post Office tax-saving plans for your investment portfolio. A few of these plans are included below.

• Senior Citizens Savings Scheme (SCSS)
• Public Provident Fund (PPF)
• National Savings Certificate (NSC)