What Is TD?
TD stands for Time
Deposit.
TD is nothing but a Fixed
Deposit or Term Deposit account.
In this scheme, the interest
is paid annually.
How Does TD Work?
Features
Income Tax Benefits
Effective 01-Apr-2020, the
income tax benefits will depend upon whether you choose old tax system or new
tax system.
Old Tax System:
The deposit amount (up to Rs.
1.5 Lakhs) under 5 Years TD will qualify for tax deduction
under Section 80C of the Income Tax Act.
This means that there is no
tax deduction benefit for deposits under 1 year, 2 years or 3 years TD account.
No TDS (Tax Deducted at
Source) under this scheme by Post Office.
Interest received under this
scheme is taxable. You need to declare the interest income under "Income
from Other Sources" during tax returns and pay the income tax as per your
income tax slab.
New Tax System:
No income tax benefits. The
deposit amount won't get any deduction benefit under Section 80C of the Income
Tax Act.
No TDS (Tax Deducted at
Source) under this scheme by Post Office.
Interest received under this
scheme is taxable. You need to declare the interest income under "Income
from Other Sources" during tax returns and pay the income tax as per your
income tax slab.
Who Can Open the Account?
Only Indian residents can open
the TD account.
TD account can be opened by
You can open more than one
account in your name or jointly with another person.
How Do You Open the Account?
1. Account can be opened by cash or cheque.
2. In case of cheque, the date of realization of cheque in the account will be
the date of account opening.
3. Any number of accounts can be opened in any Post Office.
Deposit Limits
1. Minimum deposit amount is Rs. 1,000.
2. No maximum limit for deposit.
3. Deposit amount should be in multiples of Rs. 100.
Term
You can choose one of the
following 4 options.
Interest Rate (%)
The current annual interest
rate for various tenure are given below.
|
Term |
Interest Rates (%) |
|
1 year |
5.50% |
|
2 years |
5.50% |
|
3 years |
5.50% |
|
5 years |
6.70% |
Interest is paid on
a yearly basis.
Interest rate (on the day of
account opening) will remain the same throughout the tenure of TD. It will not
change even if there are changes to the interest rate thereafter.
From 01-Apr-2016, the interest
rates of this scheme have been announced on a quarterly basis. Note that it
used to be on a yearly basis earlier.
Compounding Frequency
Quarterly compounding
frequency is followed in this scheme. But interest amount will be paid to you
on a yearly basis.
Auto-Renewal Facility
In CBS (Core Banking Solution)
Post Offices, when the TD account is matured, it will be automatically renewed
for the period for which it was initially opened.
For example, 2 Years TD
account will be automatically renewed for 2 Years. 1 year TD account will be
automatically renewed for 1 year.
Interest rate for the auto
renewed TD account will be the interest rate on the day of maturity.
Pre-Mature Closure
If the TD account is closed
before 1 year, then the Savings Bank (SB) account interest rate will be paid
for the duration for which TD account was kept.
Account Conversions
Single account can be
converted into joint account and vice versa.
Minor, after attaining
majority, must apply for conversion of the account in his name.
Account Transfer
TD Account can be transferred
from one Post Office to another Post Office.
Nomination Facility
Nomination facility is
available.
You can nominate either at the
time of account opening or after opening the account (but before maturity).
NRI And HUF
NRI (Non-Resident Indians) and
HUF (Hindu Undivided Family) cannot open the account.
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