SBI FD vs Post Office Time Deposit:Â Tax-saving fixed deposits (FDs) are those that have a tenure of more than 5 years.
SBI FD vs Post Office Time Deposit:Â Tax-saving fixed deposits (FDs) are those that have a tenure of more than 5 years. As the State Bank of India (SBI) and other Indian banks are decreasing interest rates on fixed deposits, small saving post office schemes can be a lucrative option for any investor. For their information, the post office also offers a time deposit scheme that offers income tax exemption if the deposit is for the period of five years.
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If we compare the interest rates given by the SBI for five year fixed deposit and post office time deposit for the period of five years, the difference is 1.3 per cent – SBI gives 5.4 per cent interest on tax-saving FDs while post office time deposit interest rate is 6.7 per cent if the investment period is 5 years. In fact, from April 1 this year, new rates of interest have come into effect in the post office time deposit scheme. The interest rate on 1-year, 2-year and 3-year FDs is 5.5 percent, while the interest rate on 5-year FDs is 6.7 percent.
So, assuming the same for an investment of Rs 1 lakh in both SBI FD and Post Office Time Deposit Scheme for five years, Rs 1 lakh will become Rs 1,64,362 in SBI FD giving Rs 64,362 as interest after five years.
Meanwhile if a person has invested the same Rs 1 lakh in Post Office Time Deposit Scheme, his or her Rs 1 lakh will become Rs 2,00,160.
