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The Government of India announced the National Savings Time Deposit Scheme through notification No. GSR 922 (E) on 12 December 2019. We have covered the following in this article:

1. What is National Savings Time Deposit Scheme?

The Central Government of India announced the National Savings Time Deposit Scheme under the provisions of Section 15 of the Government Savings Bank Act, 1873. The accounts under this scheme come in four maturities. The interest rate offered on these accounts is much higher than that of the regular savings bank account. The rate of interest on these accounts differ with the maturity and increase with it. An individual should maintain Rs 1,000 at all times. They can invest as low as Rs 100 in a deposit, and there is no capping on the investible amount.

2. Types of Accounts

The National Savings Time Deposit Scheme offers four accounts with different maturity periods. The accounts under this scheme come with maturity periods of one year, two years, three years and five years. These accounts can be operated individually or by a maximum of three people. Even minor accounts are permitted, the legal guardian would operate these until the minor attains the age of maturity. An individual can have more than one account under this scheme.

3. Features of National Savings Time Deposit Account

Following are some of the salient features of the National Savings Time Deposit Account:

  • Accounts can be operated individually or jointly by a maximum of three individuals
  • Minor accounts are also permitted
  • Initial deposit can be made in the form of cash, cheque, and demand draft
  • Account holders can nominate nominees for their accounts
  • Accounts under this scheme are transferable across all post office branches in India
  • A minimum of Rs 1,000 must be maintained at all times in the account
  • The minimum account that can be deposited is Rs 100 while there is no capping
  • Interest is paid out annually but calculated at the end of each quarter
  • Investments made in five-year accounts qualify for tax deductions under Section 80C of the Income Tax Act, 1961
  • Premature closure of accounts are permitted

4. Rate of Interest

As mentioned earlier, the rate of interest differs with the maturity of the accounts. The following table shows the rate of interest offered on National Savings Time Deposit accounts:

 

Account

Rate of Interest

1-year accounts

5.5%

2-year accounts

5.5%

3-year accounts

5.5%

5-year accounts

6.7%

Conclusion

Investing in National Savings Time Deposit accounts is an excellent investment option. These accounts provide much higher returns than regular savings bank accounts. One can invest as low as Rs 100 in a deposit.

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