Post Office Other Scheme

Time Deposit is a  banking service similar to a Bank Fixed Deposit  offered by Department of post, Government of India at all post office counters in the country. This scheme is meant for those investors who want to deposit a lump sum of money for a fixed period. Investor gets a lump sum (principal + interest) at the maturity of the deposit. Time Deposit scheme offers a lower, but safer, growth in investment.

• Interest is liable to tax 
  
• Balance exempt from wealth-tax 
  
• No TDS from interest

• Accounts can be opened in name of minor/person of unsound mind
• One can take a loan against a time deposit with the balance in your account pledged as security for the loan.
• Nomination facility is available

Maturity Period:

Maturity period of the deposit will be five years, extendable by another three years.  Initially the scheme will be available through designated post offices through out the country. However, the depositor may be permitted to withdraw the deposit and close the account at any time after the expiry of one year from the date of opening of the account subject to the following conditions:

• If the account is closed after the expiry of 1 year but before the expiry of 2 years from the date of opening of the account, an amount equal to one and half percent of the deposit shall be deducted.
• If the amount is closed on or after the expiry of 2 years from the date of opening of the account, an amount equal to 1% of the deposit shall be deducted.

Amount of Investment:

Liquidity:

Premature withdrawal after a period of one year will be allowed, subject to some deductions.

This scheme is available at all post offices and brokers/agents of UTI, LIC and government schemes.

• Maturity period of certificate is 8 years and 7 months. 
  
• Premature encashment is possible after 2 and half years.

• Interest is not eligible for any tax concession. 
  
• No TDS from interest.

• Can be purchased from any post office 
  
• Interest is paid only on maturity and cannot be claimed prior to maturity 
  
• Can be purchased jointly by two adults 
  
• It has been declared as "public security" under the provisions of the Mumbai Public Trust Act, 1950 
  
• Can be purchased in name of minor.

Features 
NSCs are issued in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000 for a maturity period of 5 years. There is no prescribed upper limit on investment.

Individuals, singly or jointly or on behalf of minors and trust can purchase a NSC by applying to the Post Office through a representative or an agent. 

One person can be nominated for certificates of denomination of Rs. 100- and more than one person can be nominated for higher denominations.

The certificates are easily transferable from one person to another through the post office. There is a nominal fee for registering the transfer. They can also be transferred from one post office to another.

One can take a loan against the NSC by pledging it to the RBI or a scheduled bank or a co-operative society, a corporation or a government company, a housing finance company approved by the National Housing Bank etc with the permission of the concerned post master.

Though premature encashment is not possible under normal course, under sub-rule (1) of rule 16  it is possible after the expiry of three years from the date of purchase of certificate.

Tax benefits are available on amounts invested in NSC under section 88, and exemption can be claimed under section 80L for interest accrued on the NSC. Interest accrued for any year can be treated as fresh investment in NSC for that year and tax benefits can be claimed under section 88. 

Investment up to Rs. 1,00,000/- per annum qualifies for IT Rebate under section 80C of IT Act.