India is said to be a saving economy, it implicates natuural saving culture of Indians. But from the past few years banks are decreasing interest rates which hurts the savings culture.
Today Many savers are not interested to do bank fixed deposits(FD) due to falling interest rates. But there’s still a hope to them in the form of Post Office Time Deposits(POTD).
Post Office Time Deposits are guaranteed by the central government and would offer assured returns. Currently Post Office Time Deposits offer far higher returns than bank fixed deposits. So there’s no wrong in allocating your savings to post office time deposit.
But do note that central government will revises interest rates every Quarter(3 Months)and the interest rates may hike oor decline as per governments discretion. But as of now Post office time deposits interest rates are far higher than bank fixed deposits.
Current Interest Rates of Post Office Time Deposits–
| Deposit Period | Applicable Interest Rate |
| 1 Year | 5.50% |
| 2 Year | 5.50% |
| 3 Year | 5.50% |
| 5 Year | 6.70% |
Another advantage of doing post office time deposit it is- It qualifies for income tax deduction if you deposit for a 5 Year Period.
But do note that only the principle qualifies for income tax deduction under section 80(c)but the interest income is subject to tax. The interest derived would be added to your income and taxed as per your applicable tax slab.
This 5 Year Time Deposit is suitable for lower tax bracket individuals and non tax-payers looking for assured returns much higher than the bank fixed deposits.
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