Looking for a decent return in fixed deposit or other investment schemes? The Indian post office has a few of them, which will provide decent returns on long-term investment. It is also beneficial for tax in the old income tax regime. The financial year 2024-2025 is about to end in six days, and it is the last chance for people who opted for old income tax.
To receive tax benefits under certain provisions of the Income Tax Act, taxpayers (under the previous tax regime) were required to invest in tax-saving instruments such as PPF, fixed deposits, term deposits, sukanya samridhi yojana (SSY), and so on. Here is all of the information and a comparison of bank and post office FD schemes.
What Are Postal FDs?
The Indian Postal Department operates fixed deposit products at its post offices. These FD programmes are considered safer because they are sponsored by the government. Post office FDs are offered for one, two, three, and four years.
Five-Year Post Office FDs
The five-year post office term deposit account is a government-sponsored savings plan that provides a fixed interest rate and tax breaks. These Post Office Term Deposit programmes pay an interest rate of 7.5% for the first quarter of 2025, which runs from January to March.
The government changes post office FD rates every quarter, but if an investor takes a term deposit, they are locked in for the duration of the account. People can invest in post office time deposits with a minimum of Rs 1,000. There is no cap on post office investment. These FD plans can help consumers become eligible for deductions under Section 80C of the Income Tax Act of 1961. TDS will also be deducted under this plan.
Several banks, including SBI, PNB, BoB, and ICICI Bank, offer fixed deposit schemes with varying tenures. In general, the tax benefit is offered for five-year fixed-term deposits. Most of these FD programmes have a lock-in period and provide benefits under certain provisions of the Income Tax Act. State Bank of India offers FD interest rates of up to 7.5% on investments under Rs 3 crore. Meanwhile, BoB FD rates might start from as low as 4.25% for regular consumers on investing in term deposits for a timeframe of one to two weeks.
Bank fixed deposits are also subject to TDS if the interest earned exceeds Rs 40,000. Additionally, banks deduct TDS from consumers who have not filed their PAN card.
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