Key Points
The premature withdrawal rules for post office time deposits (also known as post office FD) has been revised by the government..
As per the new rules, a 5-year post office fixed deposit (FD) cannot be prematurely withdrawn before it completes four years from the date of deposit..
Further, if a 5-year post office FD is prematurely withdrawn after it completes 4 years, then only post-office savings account interest will be paid for the entire period that the FD has remained with the post office..
As per the old rules, "where a deposit in a two-year, three-year or five-year account is withdrawn prematurely after the expiry of one year from the date of deposit, interest on such deposit shall be payable to the account holder for the completed years and months, commencing on the date of deposit and ending with the date of withdrawal, and such interest shall be calculated at the rate which shall be less by two per cent points than the rate specified for a deposit of one-year, two-year or three-year, as the case may be and interest for the completed year shall be calculated on quarterly compounding basis in accordance with the provisions of paragraph 7, and for any part of a year, interest shall be payable as per the provisions of sub-paragraph (b)."..
As per the old rules, if the 5-year post office FD is withdrawn after it completes four years, then interest rate on three-year time deposit (prevailing at the time of placing the 5-year FD in question) will be applicable for calculating interest amount payable...
