Savings
Postal FD interest rates: the post office time deposit, one rate for everyone
The post office time deposit pays 7.5% at five years, 7.1% at three, 7.0% at two and 6.9% at one, at every age. The closure maths and the 80C lock.
The post office time deposit — the product most people mean by a postal FD — pays 7.5% a year on a five-year deposit, 7.1% on three years, 7.0% on two and 6.9% on one, for the quarter ending 30 September 2026. There is no senior citizen rate and no 80-plus rate, because the scheme has no age categories at all. The four rates have stood since 1 January 2024, and the five-year figure is above the general-public peak of every one of the seven banks on our comparison of FD interest rates across major banks as their cards stood when the site last checked them.
Rates below were read on 10 September 2026 from the National Savings Institute’s rate-since-inception table, and the rules from the National Savings Time Deposit Scheme, 2019 as amended. Both apply identically at every post office in India. India Post’s own scheme page could not be reached on the day; where the two ever differ, the notified scheme binds the counter. Check the rate printed in the passbook: the rate on the day of deposit is the one that holds.
Four tenures, four rates and nothing in between
| Tenure | Rate | Interest paid each year on ₹5,00,000 | Interest over the full term |
|---|---|---|---|
| 1 year | 6.9% | ₹35,403 | ₹35,403 |
| 2 years | 7.0% | ₹35,930 | ₹71,859 |
| 3 years | 7.1% | ₹36,456 | ₹1,09,369 |
| 5 years | 7.5% | ₹38,568 | ₹1,92,840 |
The rupee figures follow the scheme’s own method: interest is compounded quarterly and paid to the account holder at the end of each year of the deposit. So 7.5% nominal is ₹38,568 on ₹5,00,000, an effective 7.71%. The scheme is explicit that no further interest is earned on interest that has fallen due and not been withdrawn, and it allows each year’s interest to be credited to a post office savings account on request. Anyone who wants compounding across years has to redeposit the interest themselves.
That is the whole schedule: four maturities and no bucket between them. For orientation, the post office savings account pays 4.0%, a rate that has not moved since 1 December 2011, and it is the rate every premature-closure rule in the scheme falls back on.
The rate is locked on the day you deposit
The scheme fixes the rate applicable on the date the account is opened for the whole term, and the Ministry of Finance notifies the schedule quarter by quarter. NSI’s table shows how much that has mattered: the one-year rate was 5.5% in the last quarter of 2022, 6.6% in the first quarter of 2023, 6.8% in the second and 6.9% from July 2023; the five-year rate went 6.7%, 7.0%, 7.5% over the same three quarters. Whatever is notified for 1 October 2026 touches only deposits opened from that day.
Longer pays more here, which is not true of the bank cards
On most bank cards in 2026 the best rate sits on a special tenor between one and two years and the longest deposits pay less. The post office ladder rises the whole way, and the step from three years to five is forty basis points against ten for each of the first two.
On ₹5,00,000, a five-year deposit pays ₹38,568 a year against ₹35,403 on a one-year deposit rolled over — ₹3,165 a year, or ₹15,825 over five years, if the one-year rate stayed at 6.9% for every renewal, which the quarterly history above shows it need not. Forty basis points more, and a rate that cannot be cut on you for five years; against that, the closure rule.
One rate for everyone: what the missing senior band means
Every bank card on our comparison publishes a senior column, and some an 80-plus column; the scheme has neither, and the consequence runs in two directions. Under 60, the 7.5% is compared against the banks’ general rates, which is where it looks strongest; over 60, against their senior rates — and 7.5% still clears the senior rate each of the seven banks shows on the comparison page, as they stood when last checked. How each bank structures its uplift, and what removes it, is in our page on senior citizen FD rates.
None of that makes the time deposit the first stop for retirement money. The Senior Citizens Savings Scheme pays 8.2% for the quarter ending 30 September 2026 — ₹61,500 a quarter on the ₹30 lakh ceiling — from age 60, or 55 on voluntary retirement and 50 for retired defence personnel. Fill it first; the SCSS calculator shows the payout, and the time deposit is the overflow.
Eligibility is wide: a single adult, up to three adults jointly, a minor who has reached ten, or a guardian for a minor may open an account, and one person may hold as many accounts as they like. Two residence rules from the General Rules matter: a depositor who becomes a non-resident during the term earns the contracted rate to maturity and nothing after it, and one who ceases to be an Indian citizen has the account closed from the preceding month-end, with interest at the savings-account rate until then.
Maturity, extension and the day after
Each account holds exactly one deposit, repayable at the end of its term on an application to the post office. Three things can then happen.
You extend. A matured account may be extended for another term of the same length, by applying within a window that runs from the repayment date: six months for a one-year account, twelve for a two-year, eighteen for a three-year or five-year. The rate is the one applicable to that category on the date of repayment, so an extension filed late but inside the window runs from the maturity date at the rate then in force, not at the rate on the day you walked in. An account may be extended only twice; the option can be given when the account is opened and revoked any time before the repayment date.
You do nothing. Under the General Rules, a matured account that is not closed continues to earn interest at the post office savings account rate until it is closed. On ₹5,00,000 that is a fall from ₹38,568 a year to ₹20,000, from the day after maturity, with no notice.
You close. Repayment is in full; there is no partial withdrawal from a time deposit account. That is the reason to split a large sum into several accounts of the same tenure rather than one.
Breaking it early: two points off a lower rate, and paid interest is recovered
The scheme’s premature closure rule is statutory and the same at every counter. As substituted in November 2023, it reads:
- Nothing can be withdrawn before six months from the date of deposit.
- Closed after six months but before one year, the deposit earns simple interest at the post office savings account rate — 4.0% — for the completed months.
- Closed after one year, a two- or three-year deposit earns interest for the completed years at two percentage points less than the rate for a one-year or two-year deposit, matched to the years completed, compounded quarterly as the scheme’s normal interest is; the part-year beyond the last anniversary earns the savings-account rate.
- The amended paragraph 8 says nothing about a five-year deposit closed between one year and four years — the rule for that window is the pre-amendment one for accounts opened before the November 2023 cut-off, and is unstated in the notification for accounts opened after it.
- A five-year deposit closed after four years earns the savings-account rate, on our reading for the whole period, where the account was opened from November 2023 onwards. The Department’s own circulars have put the cut-off at 9 and at 10 November 2023; for a deposit opened before it, the Department of Posts order of 24 July 2026 confirms the earlier rule, the three-year rate less two points.
- Any interest already paid on the anniversaries is recovered from the amount repaid.
Take ₹5,00,000 in a five-year deposit at 7.5%, closed after two years and three months. Two anniversaries have passed, so ₹77,136 of interest has already been paid out. For a deposit opened before the November 2023 cut-off the pre-amendment rule applies and the rebuild uses the two-year rate of 7.0% less two points, so 5.0%: ₹25,473 for each completed year, ₹50,945 for two, plus three months at 4.0% on the principal, ₹5,000 — ₹55,945 in all. The counter recovers the ₹21,191 difference from the principal and repays ₹4,78,809. Had the deposit been entitled to its contracted rate for those 27 months it would have earned about ₹86,511; the closure costs ₹30,566, more than a third of the interest. Each completed year is worked on the table in force on the opening date, and the part-year interest on the principal alone. For a deposit opened after the cut-off the notification is silent on this window; ask the counter in writing which rate it will use before signing the closure form.
Two shorter cases show the shape. Close the same deposit at nine months and it earns ₹15,000, against ₹28,125 at the contracted rate on simple interest. Close it after four years and one month, if it was opened from November 2023, and the whole period is repriced at 4.0%: roughly ₹81,700 of interest against the ₹1,54,272 already paid out, so about ₹72,600 comes back out of the principal. Closing the same deposit at three years and eleven months produces about ₹96,300 — three completed years at the three-year rate less two points, 5.1%, plus eleven months at 4.0%. That rebuild is the pre-amendment rule, which the Department of Posts order of 24 July 2026 confirms for accounts opened before 9 November 2023; for an account opened after it the amended notification does not say. On that older rule a closure at four years is worth about ₹1,04,000.
The alternative to closing is to pledge. The scheme allows an account to be transferred as security to a scheduled bank, a co-operative bank, a public or private corporation, a local authority or an approved housing finance company, on an application supported by the pledgee’s acceptance. Whether a bank will lend against it, and at what spread, is the bank’s decision, but the mechanism keeps the 7.5% alive.
The five-year deposit and the deduction
NSI’s scheme page confines the deduction long known as section 80C to the five-year time deposit; the one-, two- and three-year deposits do not qualify. Three qualifications follow.
The deduction exists under the old tax regime only. The new regime is the default under the Income-tax Act, 2025, in force from 1 April 2026, and carries no equivalent; for most salaried savers the five-year deposit produces no deduction at all, and its 7.5% has to stand on its own. Old versus new tax regime sets out the comparison.
The deduction was built with a lock of its own: under the repealed Income-tax Act, 1961, section 80C(6A) treated an amount withdrawn from a five-year post office time deposit before five years as income of the year of withdrawal. The deduction now sits in section 123 and Schedule XV of the 2025 Act, whose conditions we could not read on a primary source; assume the claw-back has carried across.
Inside the same family, the National Savings Certificate is a five-year instrument at 7.7% that also qualifies, compounds annually and pays everything at maturity. Which of the two fits is a question about income against growth; the whole family is compared in our page on post office savings schemes.
Tax takes the next bite
Time deposit interest is taxable at your slab rate as income from other sources. Because it is paid annually, each year’s ₹38,568 lands in that year’s return rather than piling up to maturity.
Whether the post office deducts tax at source on time deposit interest, and at what threshold, should be confirmed at the counter: the ₹50,000 threshold, ₹1,00,000 for a resident senior citizen, and the 10%-with-PAN and 20%-without rates are the general deposit-interest rules from 1 April 2025. At 7.5% the lower threshold would be reached at roughly ₹6.5 lakh of five-year deposits, or ₹13 lakh for a senior citizen. Where deduction does apply, what stops it is Form 121, which replaced Forms 15G and 15H from 1 April 2026, and it requires both nil estimated liability and total income below the basic exemption limit, whatever the depositor’s age. A resident senior citizen on the old regime may set up to ₹50,000 of post office and bank deposit interest against income under the relief long known as 80TTB; the ₹10,000 relief under 80TTA covers savings account interest only and does not reach a time deposit. Our guide to tax on FD interest has the full treatment.
At 7.5% before tax, a depositor in the 30% slab keeps about 5.2% after cess — the number to hold against a bank’s senior rate.
No deposit insurance, and no deposit ceiling
Deposit insurance of ₹5 lakh per depositor per bank, principal and accrued interest together, is a feature of bank deposits. A post office time deposit is not a bank deposit, so DICGC cover does not apply to it and neither does the ₹5 lakh ceiling. The scheme is notified by the Central Government under the Government Savings Promotion Act, 1873, and the scheme itself sets no maximum deposit. What the bank cover does reach is in our page on DICGC deposit insurance.
Before you book
| If the money is needed in | The deposit that fits | Rate | The trap next to it |
|---|---|---|---|
| Under six months | None — savings account | 4.0% | Nothing can be withdrawn from a time deposit before six months |
| Six to twelve months | Savings account, or a one-year deposit you may have to close | 4.0% | A one-year deposit closed at nine months earns 4.0% |
| About a year | 1 year | 6.9% | The extension window is six months; miss it and the balance earns 4.0% |
| About two years | 2 years | 7.0% | Only 0.1 pp over a rolled one-year deposit |
| About three years | 3 years | 7.1% | Closed after one year: the one-year rate less two points |
| About four years | 3 years, then 1 year | 7.1%, then the rate at renewal | A five-year deposit closed after four years earns 4.0% throughout |
| Five years | 5 years | 7.5% | Interest is paid out yearly; redeposit it yourself |
| Beyond five years | 5 years, extended | 7.5% now, the notified rate at extension | Extension only twice; then close and reopen |
Give the extension option at opening, instruct the annual interest into a savings account, nominate, and split a large sum into several accounts so that a partial need does not reprice the whole. Then use the FD interest rates calculator at 7.5% with annual payout to see the cash flow, and confirm the rate in the passbook on the day.
Common questions
Is there a senior citizen rate on the post office time deposit?
No. The National Savings Time Deposit Scheme has no age categories, so a depositor of 82 earns the same 7.5% on a five-year deposit as a depositor of 25, and there is no 80-plus band either. That is a disadvantage against a bank only where the bank's senior rate beats 7.5%, which none of the seven banks on our comparison page did when the site last checked them. A depositor aged 60 or above should fill the Senior Citizens Savings Scheme at 8.2% first, up to its ₹30 lakh ceiling, and treat the time deposit as the overflow.
Does a post office time deposit compound?
Within each year, yes; across years, no. Interest is compounded quarterly and paid out at the end of every year of the deposit, so 7.5% on ₹5,00,000 produces ₹38,568 on each anniversary, an effective 7.71%. The scheme pays no further interest on interest that has fallen due and not been withdrawn, so the money does not grow inside the account the way a bank's cumulative deposit does. Have the annual interest credited to a savings account, or redeposit it in a fresh time deposit of at least ₹1,000, if compounding over the full term is what you want.
What happens if I close a five-year deposit after four years?
For an account opened from November 2023 onwards, the amended scheme pays interest at the post office savings account rate, 4.0%, and recovers the interest already paid on the four anniversaries from the principal. On ₹5,00,000 that is roughly ₹81,700 of interest against ₹1,54,272 already received, so about ₹72,600 comes back out of the deposit. A deposit opened before 9 November 2023 and closed a couple of months earlier, at three years and eleven months, does better: the pre-amendment rule gives it the three-year rate less two points for the completed years, which a Department of Posts order of July 2026 confirms for those accounts. What the amended notification does for an account opened after that date, closed at the same point, it does not say.
Can I claim the 80C deduction on a one-, two- or three-year time deposit?
No. NSI's scheme page confines the deduction to the five-year time deposit, and even there it is available only under the old tax regime; the new regime, the default under the Income-tax Act, 2025, has no equivalent. Under the repealed 1961 Act, section 80C(6A) also treated an amount withdrawn from a five-year post office deposit before five years as income of the year of withdrawal. The 2025 Act carries the deduction in section 123 and Schedule XV, whose conditions we could not read on a primary source, so treat the claw-back as live before breaking a deposit you claimed on.
Is TDS deducted on post office time deposit interest?
Interest is taxable at your slab rate in every case. Whether the post office deducts tax at source on time deposit interest, and at what threshold, should be confirmed at the counter — the ₹50,000 threshold, ₹1,00,000 for a resident senior citizen, and the 10% with PAN on record and 20% without rates are the general deposit-interest rules from 1 April 2025. At 7.5% that would mean roughly ₹6.5 lakh of five-year deposits, or ₹13 lakh for a senior citizen, before deduction starts. TDS is an advance against your tax, not the tax itself. The declaration that stops it is Form 121, which replaced Forms 15G and 15H from 1 April 2026, and it requires both nil estimated liability and total income below the basic exemption limit.
Sources
Rates and rules on this page were read directly from the following sources on the dates shown. Figures change — if you are about to act on one, confirm it at the source.
- National Savings Time Deposit Account Scheme — Interest Rate Since Inception (current row 01-01-2024 to 30-09-2026)
- National Savings Time Deposit Account Scheme — scheme summary
- National Savings Time Deposit Scheme, 2019 — full text (G.S.R. 922(E) dated 12 December 2019, as amended by G.S.R. 289(E) dated 5 May 2020)
- Post Office Savings Account Scheme — Interest Rate Since Inception (current row 01-12-2011 to 30-09-2026)
- Government Savings Promotion General Rules, 2018 — rule 9, payment of interest
- Distribution of National Savings Schemes
- National Savings Time Deposit (Fourth Amendment) Scheme, 2023 — G.S.R. 830(E) dated 7 November 2023, substituted paragraph 8 (reproduction of the Gazette notification)
- SB Order No. 22/2023 corrigendum dated 29 November 2023 — applicability of the amended premature-closure rule (reproduction)
- Department of Posts order FS-10/27/2024-FS-DOP dated 24 July 2026 on five-year time deposits opened before 9 November 2023 (reproduction)
- Guide to deposit insurance