Post Office Time Deposits (POTDs) : Similar to fixed deposits of commercial banks, POTDS have the following features:
- Deposits can be made in multiplies of 50 without any limit.
- The interest rates on POTDs are, in general, slightly higher than those on bank deposits.
- The interest is calculated half-yearly and paid annually.
- No withdrawal is permitted upto six months.
- After six months, withdrawals are permitted. However, on withdrawals made between six months and one year, no interest is payable. On withdrawals after one year, but before the term of deposit, interest is paid for the period the deposit has been held, subject to a penal deduction of 2 percent.
- A POTD account can be pledged.
- Deposits in 10 years to 15 years Post Office Cumulative Time Deposit Account can be deducted before computing the taxable income under Section 80 C.
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