India Post runs its own version of a fixed deposit, sold in four lengths which are 1, 2, 3, and 5 years, each with its own locked-in rate. Pick a tenure below, enter your deposit, and see exactly what lands in your account every year until it matures.
| Year | Interest Paid Out | Cumulative Interest Received |
|---|
India Post works out your interest using quarterly compounding, but credits the amount to you once a year rather than folding it back into the deposit. Because your original deposit stays untouched, the payout you see for year one repeats identically every year until the term ends and then you get the exact deposit amount back.
How a Post Office TD Actually Pays You
Most people assume a fixed deposit just sits there and grows into one lump sum at the end. A Post Office Time Deposit does something a little different: it works out your interest every quarter internally, but instead of adding that interest back into your deposit, it pays the whole year’s worth to you in one go at each year-end. Your original deposit never grows or shrinks, it just keeps generating the same payout, year after year, until the term is up and you get it back in full.
Four Tenures, Four Different Rates
Unlike PPF or NSC, where one rate applies to everyone, the Post Office TD has a separate rate for each length you choose. The rate step-up rewards patience: locking in for 5 years earns you noticeably more per year than locking in for just 1.
| Tenure | Rate | Section 80C Benefit |
|---|---|---|
| 1 Year | 6.9% | No |
| 2 Years | 7.0% | No |
| 3 Years | 7.1% | No |
| 5 Years | 7.5% | Yes, up to Rs 1.5 lakh |
Only the 5-year term carries a tax deduction. If you are choosing this scheme specifically to reduce your taxable income under the old regime, the 5-year option is the only one that qualifies, the 1, 2, and 3-year deposits do not.
Using the Calculator
Tap the tenure that matches your plan and the rate fills in automatically, along with a badge telling you whether that length qualifies for the 80C deduction. Enter your deposit, and the calculator shows what you will receive every year, your total interest across the whole term, and the deposit you get back once it matures. Open the year-by-year table if you want to see the identical payout figure repeated across each year of your chosen term.
What Happens If You Need the Money Early
Nothing can be withdrawn in the first 6 months, full stop. Close the account between 6 and 12 months, and you only get the ordinary Post Office Savings Account rate (currently 4%) for that period, losing almost all the benefit of the TD rate. Close it after a full year but before maturity, and you get your tenure’s rate minus 2 percentage points for every completed year, plus the savings rate for any leftover partial period. There is a separate, stricter rule for the 5-year 80C deposit, for accounts opened after 10 November 2023, this one specifically cannot be closed before 4 years have passed, precisely to prevent people from claiming the tax deduction and pulling the money out shortly after.
When your TD matures, you can also extend it rather than withdraw, within 6 months for a 1-year TD, within 12 months for a 2-year TD, and within 18 months for a 3-year or 5-year TD. The extension carries the interest rate in force on the day you extend, not necessarily your original rate.
Where a Post Office TD Beats a Bank FD
A Post Office Time Deposit carries the full backing of the Government of India with no cap on the guaranteed amount, while a bank FD is protected only up to Rs 5 lakh per depositor per bank under DICGC insurance. For large deposits well above that Rs 5 lakh mark, the Post Office TD removes a real source of risk that a bank FD does not. The trade-off is that Post Office TD interest income does not benefit from any TDS deduction being waived, it is fully taxable at your slab rate exactly like a bank FD, just without the automatic TDS a bank applies once your interest crosses the threshold.
Frequently Asked Questions (FAQs)
Ans. Yes. The return on a Post Office Time Deposit is fixed at the time of account opening and remains unchanged throughout the selected tenure. Your maturity amount depends on the deposit amount, tenure chosen, and the applicable interest rate.
Ans. Only the 5-Year Post Office Time Deposit qualifies for deduction under Section 80C of the Income Tax Act, subject to the overall Section 80C limit and applicable tax provisions. The 1-Year, 2-Year, and 3-Year TD accounts do not provide this tax benefit.
Ans. Yes. Premature closure is permitted subject to the conditions prescribed under the Government Savings Promotion General Rules and the applicable Small Savings Scheme notifications. Interest on prematurely closed accounts may be lower than the contracted rate.
Ans. Yes. A Post Office TD can be extended within the period allowed under India Post rules. The extended account will earn interest at the rate applicable on the date of extension, which may differ from the original rate.
Ans. Yes. The Post Office Time Deposit Scheme is a Government of India Small Savings Scheme operated through India Post. It is considered one of the government’s savings instruments available to investors.
Ans. Yes. Interest earned on a Post Office Time Deposit is taxable according to the applicable provisions of the Income Tax Act. However, the principal amount invested in a 5-Year TD may qualify for deduction under Section 80C, subject to prevailing rules.
Ans. Yes. Post Office Time Deposit accounts can be opened either individually or jointly with up to three adults, as permitted under India Post rules.
Ans. Yes. A guardian can open a TD account on behalf of a minor. Minors above 10 years of age may also operate the account in accordance with the rules prescribed by India Post.
Ans. The minimum deposit amount is ₹1,000, and deposits thereafter must be made in multiples of ₹100. There is currently no maximum investment limit under the scheme.
Ans. The scheme offers four tenure options: 1 Year, 2 Years, 3 Years, and 5 Years. Each tenure carries its own interest rate, which is notified by the Government of India from time to time.
Tabassum is a government document researcher and writer with over 5 years of experience exclusively dedicated to tracking and simplifying Central and State Government document processes across India. She has researched and published detailed guides on 100+ government documents and certificates – including Aadhaar Card, PAN Card, Ration Card, Domicile Certificate, and Birth Certificate – covering all states and the Central Government, helping lakhs of Indian citizens successfully complete their paperwork in simple, easy-to-understand language.