Skip to content

Independent. Unsponsored. Built for India.

Live rates Repo rate 5.25% USD/INR ₹96.32 Gold 24K (10g) ₹1,48,138 All rates
Advertiser disclosure. Some links on this page are partner links. They never change our rankings. Read how

Credsir earns money when you apply for a product through some of the links on this site. That revenue funds the research. It does not buy a placement: our rankings come from a published scoring method that runs on the same data for every product, partner or not. Products we do not earn from appear in these lists whenever they win on the numbers — and several currently do.

Investing

Post Office Time Deposit: Tenures, Rates and Tax Rules

A post office FD runs for 1, 2, 3 or 5 years at 6.9% to 7.5% for July-September 2026. Only the 5-year deposit gets the old-regime deduction.

AS

Written by Aarav Sharma

Published 3 October 2026·6 min read

On this page9 sections
Credsir Investing guide cover with a trending up icon

A post office FD, officially the National Savings Time Deposit (TD), runs for 1, 2, 3 or 5 years. For deposits made from 1 July to 30 September 2026, it pays 6.9% to 7.5% a year, and the rate stays fixed until maturity. Only the 5-year deposit qualifies for the tax deduction under the old regime.

Key facts

Item Rule
Scheme National Savings Time Deposit Scheme, 2019
Tenures 1, 2, 3 and 5 years
Deposit One deposit per account, minimum ₹1,000, in multiples of ₹100; no upper limit
Interest Compounded quarterly, paid once a year
Who can open An adult, up to 3 adults jointly, a minor aged 10 or more, or a guardian for a minor
Early closure Not allowed in the first 6 months
Tax deduction 5-year TD only, under the old regime
Next rate review October-December 2026 rates had not been announced on 16 September 2026

Current post office FD interest rates

The Finance Ministry sets small savings rates every quarter. Its office memorandum of 30 June 2026 kept rates for July to September 2026 unchanged from the previous quarter. The National Savings Institute lists these time deposit rates as applying from 1 January 2024 to 30 September 2026:

Tenure Rate (per year) Yearly interest on ₹1,00,000*
1 year 6.9% ₹7,081
2 years 7.0% ₹7,186
3 years 7.1% ₹7,291
5 years 7.5% ₹7,714

*Our calculation, using quarterly compounding over one year.

The rate on the day you open the account applies for the full term, even if the government changes rates later. Rates for October to December 2026 are due around the end of September. Check our small savings scheme rates page for the latest quarter.

How interest is paid and compounded

Interest is calculated quarterly but paid once a year, counted from the date you opened the account. You can have the yearly interest credited to your post office savings account. Interest left uncollected earns nothing extra, so a savings account link or a reinvestment plan helps.

On maturity, you can take the money or extend the deposit for the same tenure. Apply in Form-3 within 6 months of maturity for a 1-year TD, 12 months for a 2-year TD, or 18 months for a 3-year or 5-year TD. You can also opt for extension when you open the account. An account can be extended only twice, and the extended term earns the rate in force on the maturity date.

How to open a post office time deposit

Documents

  • Account opening form (Form-1 under the scheme)
  • Aadhaar number, or proof of Aadhaar enrolment if the number is not yet issued
  • PAN, or Form 60
  • A recent photograph and the deposit amount

If you open without PAN, you must give it within 2 months once the balance crosses ₹50,000, or credits in a financial year cross ₹1,00,000. The account stops operating until you do.

Steps at the post office

  1. Visit any post office that handles savings bank work and ask for the time deposit account opening form.
  2. Fill in the tenure, amount, nominee and whether you want interest credited to your savings account.
  3. Attach self-attested copies of Aadhaar and PAN and show the originals.
  4. Pay the deposit and collect the account passbook or receipt.

Opening online

If you hold an active post office savings account with DoP internet banking, you can open a TD online. Log in to the India Post e-banking portal and go to General Services > Service request > New request.

Premature withdrawal rules and penalty

You apply for early closure in Form-4. Paragraph 8 of the scheme sets the payout:

When you close Interest paid
Before 6 months Closure not allowed
After 6 months, before 1 year Post office savings account rate (4% since December 2011) for completed months
After 1 year (2, 3 or 5-year TD) 2 percentage points below the rate for a 1, 2 or 3-year deposit, as the case may be, for the completed period
5-year TD closed after 4 years The rule applies the 3-year TD rate

Any interest already paid at the higher rate is recovered from the closure amount. Breaking a TD early therefore costs real money.

Tax on interest and the 5-year TD deduction

Time deposit interest is taxable as income from other sources at your slab rate. Report it in your return every year, even when no TDS appears in your Form 26AS.

A 5-year TD qualifies for the deduction that was Section 80C of the Income-tax Act, 1961. From tax year 2026-27, the same deduction sits in section 123 of the Income-tax Act, 2025, and our section number guide maps the change. The deduction is available only if you choose the old tax regime, within the combined ₹1,50,000 limit. The 1, 2 and 3-year deposits get no deduction. See our Section 80C guide for what else shares that limit.

If your tax position is complicated, for example with several deposits across family members, a tax professional can check how the interest should be reported.

Post office TD vs bank FD

Point Post office TD Bank FD
Who sets the rate Central Government, each quarter Each bank
Tenure choice 1, 2, 3 or 5 years only Set by each bank
Safety Government of India scheme DICGC insures up to ₹5 lakh per depositor per bank, principal and interest together
Tax-saving option 5-year TD 5-year tax-saver FD
Early closure Not before 6 months; penalty as above Bank’s own penalty rules

To compare a TD with a bank deposit on your own numbers, use the FD calculator. Our post office savings schemes page compares the TD with PPF, NSC, MIS and other schemes.

Frequently asked questions

What is the post office FD interest rate for September 2026?

6.9% for 1 year, 7.0% for 2 years, 7.1% for 3 years and 7.5% for 5 years, for deposits made from 1 July to 30 September 2026.

Is there a maximum limit on a post office time deposit?

No. The minimum is ₹1,000 in multiples of ₹100, and you can open more than one account.

Does the rate change if the government cuts rates later?

No. The rate on the date you open the account applies until maturity.

Can I withdraw a post office FD before maturity?

Yes, but only after 6 months. Closing within the first year earns the savings account rate, and later closures earn 2 percentage points less than the scheme rate.

Is post office FD interest tax-free?

No. Interest is taxed at your slab rate. Only the 5-year deposit amount qualifies for a deduction, and only under the old regime.

Can I open a post office FD online?

Yes, if you have an active post office savings account with DoP internet banking. The option is under General Services > Service request > New request.

Can a minor open a time deposit?

A minor aged 10 or more can open one in their own name, and a guardian can open one for a younger child.

Sources

Related articles