Time Deposit Tax Saving Rule: The Post Office’s ‘Time Deposit’ small savings plan is an excellent option for saving on taxes. A Time Deposit Account at the Post Office can be established at any post office nationwide. You can save on taxes for deposits made in the scheme for 5 years.
Tax saving method
Taxation system includes two kinds of tax regimes. New taxation system and previous taxation system. The tax deduction under section 80C is applicable only in the old tax regime. The Small Savings Scheme of the Post Office is very favored by Indians because it is hassle-free and secure. In this regard, the Post Office Time Deposit Scheme resembles the fixed deposit offered by banks. A Post Office Time Deposit Account can be established at any branch for durations of 1, 2, 3, or 5 years. In this case, the advantage of tax deduction can be accessed on a 5-year deposit. According to Section 80C of the Income Tax Act 1961, a tax deduction up to Rs 1.5 lakh is allowed on 5-year deposits. For investors averse to risk, opting for fixed deposits in post offices is a favored choice.
Facility to withdraw fund
There is an option to withdraw funds from a POTD account early or prior to maturity. This is referred to as premature withdrawal. As per the guidelines, early withdrawal is permitted after a duration of 6 months from the account opening date. If a withdrawal occurs within 6-12 months from when the account was opened, interest will be calculated according to the rates of the Post Office Savings Account. An account can be created online or offline via post office net banking.
A Post Office Time Deposit Account can be established either individually or collectively. It can be moved from one post office to a different one. Minors may establish an account with the consent of a legal guardian. Multiple accounts can be established at any post office. A nomination option is available.
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