Just like the bank FDs, these time deposits are meant for investors who want to deposit a lump sum amount for a fixed period. One of the major differences between these and bank FDs is the option of getting interest on an yearly basis, rather than on maturity.
RATE OF INTEREST:
Interest payable annually, but calculated at quarterly rests
Period of Deposit |
Rate of Interest p.a. (For deposits made on or after 15.1.2000 but before 1.3.2001) |
Rate of interest per annum (For deposits made on or after 1.3.2001) |
1 Year TD |
8% |
7.5% |
2 Years TD |
9% |
8% |
3 Years TD |
10% |
9% |
5 Years TD |
10.5% |
9% |
TAX CONSIDERATION :
Interest qualifies for deduction u/s 80 L . No TDS on interest.
MODE OF ACCOUNT HOLDING:
A Time Deposit Account (TDA) can be opened by an individual adult as a single person account, two adults in a joint mode or by a guardian on behalf of the minor who has attained the age of 10 years, or the guardian of a person of a person of unsound mind in his own name. A depositor can have more than one account in his name or jointly with another, either in the same post office or in different post offices.
MODE OF PAYMENT:
The account may been opened through cash/cheque/demand draft. If the deposit is made by cheque /demand draft, the date of credit of the instrument shall be the due date of its encashment and not the date of its presentation. There is no maximum limit of deposit in an account. Amount has to be deposited in multiples of Rs 50.
Outstation cheques/drafts can be deposited in T.D. account, which satisfy the condition of deposit. The collection charges will be levied on such outstation cheques. The depositor will be requested to pay the collection charges in cash while tendering the cheque for deposit.
NOMINATION:
Nomination facility is available.
INVESTMENT LIMITS:
There is no maximum limit on the amount of investment made.
TENURE:
There are four types of accounts, namely, 1-year account, 2-year account, 3-year account and 5-year account.
There shall be only one deposit in the account. The deposit shall be in multiple of Rs 50. No subsequent deposit should be accepted in the same account.
TRANSFERABILITY:
A TD account is transferable from one person to another, and the transfer has to be made through the post office.
PREMATURE WITHDRAWAL:
No deposit may be withdrawn before 6 months of the date of deposit. If the amount is withdrawn before one year of the date of deposit, no interest would be payable.
In case of withdrawal after one year of the date of deposit, the interest rate paid is 2% less than the rate specified for the period for which the deposit has been held.
In case of death of the depositor, no interest is payable when the deposit is withdrawn by their nominee before the expiry of one year from the date of deposit. When the deposit is withdrawn by the heir/nominee after one year, say after 2 years in case of a 5 year account, interest payable will be as admissible on a 2 year in case of a 5 year account. There will, however, be no penal reduction of interest by 2% as in the case of premature closure of account in normal cases. The rate of interest will be the normal rate for completed years.
ENCASHMENT AT MATURITY:
The deposit shall be repayable only after the expiry of the period for which it is made, namely, one year, 2 years or 5 years as the case may be.
The repayment of deposit or payment of interest will be made by the post office where the account stands. The departmental offices are competent to make payment of annual interest and repayment of deposit on maturity without the prior sanction of the head office.
In case of 2-year, 3-year and 5-year accounts, the depositor can request the post office to credit the annual interest in his savings account if it stands in the same post office. This facility will be available for accounts standing at head and sub offices and not for accounts which stand at E.D. sub offices and branch offices.
When the repayment of the deposit has become due but has not been taken, post maturity interest shall be allowed on the amount due (principal plus interest) for a maximum period of 2 years from the date of maturity to the date of repayment of deposit subject to the following conditions:
a. The interest shall be simple and shall be calculated at the rate applicable from time to time to single/joint savings accounts.
b. No interest shall be allowed for any part of the period which is less than one month. The month should be calculated from date to date and not taken as a calendar month.
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