The interest rate on FD including savings accounts is on rising after the RBI hiked the repo rate for the second time this Financial Year. Despite recent hikes in Fixed Deposit interest rates by major banks including private sector banks, this post office scheme's interest rates are higher than many of them, to be particular the top Pubic Sector banks (PSB).
PSBs are considered by the majority of individuals because of several reasons, first, their public sector bank and second, because it is PSBs, it's safe to invest in as it is backed by the government. However, for investors looking for a high-interest rate on investments but also want to invest in a safe scheme, backed by the government then the post office scheme is the right choice. The name of the Post office scheme is National Saving Time Deposit Account also known as Post Office Time Deposit Account.
National Saving Time Deposit Account
The interest rate on fixed deposits has recently been raised by the 3 biggest PSBs, State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda (BOB). In this case, you should first be aware of the interest rates of the National Savings Time Deposit Account or Post Office FD if you intend to open an FD with one of these the PSBs or any other bank. This post office FD's interest rate is still greater than various bank FDs.
FD Interest Rate
The National Savings Fixed Deposit Account offers interest rates up to 6.7%. This is only a single kind of FD. You can receive fixed returns by investing in it for a set amount of time. For terms ranging from 1 to 5 years, the fixed deposit account offers an interest rate of 5.5 to 6.7 per cent. 1000 rupees is the required minimum investment. There is no upper limit on investment.
Tax exemption advantage under the scheme on investment of 5 years
Currently, investing in this Post Office FD scheme for 5 years can help you to save tax under section 80C of the Income Tax Act of 1961. Under these section, you are eligible for an income tax exemption up to Rs. 1.50 lakh. In addition, bank FDs are also eligible for tax exemption for a period of five years under Tax Saver FD schemes.
Source - indiapost.gov.in