If a deposit in a five-year account is withdrawn prematurely after four years from the date of account opening, interest at the Post Office Savings Account rate of 4%.
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Premature closure of account
No deposit may be withdrawn before six months have passed from the date of deposit.
If a deposit in a one-year, two-year, three-year, or five-year account is withdrawn prematurely after six months but before the expiry of one year from the date of deposit, interest at the rate applicable to Post Office Savings Account for the completed months is payable to the account holder.New PPF rule: Interest calculation on premature closure of PPF account changed
When a deposit in a two-year or three-year account is withdrawn prematurely after one year from the date of deposit, interest on such deposit is payable to the account holder for the completed years and months beginning on the date of deposit and ending on the date of withdrawal, and such interest is calculated at a rate that is two percentage points less than the rate specified for a deposit of one or two years, as the case may be.
Change in interest rate calculation
If a deposit in a five-year account is withdrawn prematurely after four years from the date of account opening, interest at the rate applicable to Post Office Savings Accounts is payable.
It means that on premature withdrawal, interest of post office savings account that is 4% will be paid.
Earlier interest rate calculation
If a five-year time deposit account is closed after four years from the date of deposit, the rate applicable to three-year time deposit accounts will be used to calculate interest.
Current rules for premature closure of post office term deposits as per the India Post website:
(i)No deposit shall be withdrawn before the expiry of six months from the date of deposit.
(ii) If TD account closed after 6 month but before 1 year, PO Savings Account Interest rate will be applicable.
(iii) If 2/3/5 year TD account prematurely closed after 1 year, interest shall be calculated 2 % less than of TD interest rate (i.e. 1/2/3 years) for completed years, and for part period less than a year, PO Savings Interest rates will be applicable.
(iv)TD account can be closed prematurely by submitting prescribed application form with pass book at concerned Post Office.
Time deposit details
The deposit amount is repayable after one year, two years, three years, or five years (as applicable) from the date of opening. The annual interest can be credited to the account holder’s savings account. The 5 year TD investment qualifies for the benefit of section 80C of the Income Tax Act of 1961.
Time deposit interest rate
Extension of Account
On maturity depositor may further extend TD account for another tenure for which account was initially opened.
(ii) TD account can be extended from date of maturity within the following prescribed period..
1 year TD = within 6 months of maturity.
2 year TD = within 12 months of maturity.
3/5 year TD = within 18 months of maturity.
Interest rate applicable to respective TD account on the day of maturity shall be applicable to the extended period.