Sudhir SinghUpdated on June 18, 2026
A Post Office Fixed Deposit, officially called the Post Office Time Deposit (TD), works the same way as a bank FD but carries a government guarantee on the full amount. There is no deposit insurance limit here. If you put Rs. 20 lakh in a Post Office TD, the entire Rs. 20 lakh is backed by the Government of India.
Interest rates are revised quarterly by the Ministry of Finance and tend to stay competitive, especially the 5-year TD which also qualifies for an income tax deduction.
Current Post Office TD Interest Rates
| Tenure | Interest Rate (per annum) | 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 |
Interest is calculated quarterly but credited annually to your savings account. Always verify current rates at indiapost.gov.in before opening as they are revised every quarter.
Key Features at a Glance
- Minimum deposit: Rs. 1,000. No upper limit.
- Can be held as single or joint account (up to 3 holders).
- Nomination facility available at the time of opening or later.
- Account can be transferred from one post office to another across India.
- TDS is deducted on interest income above Rs. 40,000 per year (Rs. 50,000 for senior citizens).
- Interest income is taxable as per your income tax slab.
How to Open a Post Office FD at the Post Office
- Visit your nearest post office with a post office savings account. If you do not have one, open it first (takes about 15 minutes with Aadhaar and PAN).
- Fill in the TD account opening form (Form TD-1). Ask at the counter for the form.
- Attach copies of Aadhaar, PAN, and one passport-size photograph.
- Submit the form with your deposit amount (cash or cheque).
- You receive a passbook showing the TD account details, tenure, maturity date, and interest rate locked at opening.
How to Open Post Office FD Online
If you have internet banking through the Department of Posts (DOP), you can open a TD from home.
- Log in at ebanking.indiapost.gov.in with your DOP internet banking credentials.
- Go to “General Services” and select “Service Requests”.
- Choose “New TD Account” or “Open TD”.
- Enter the amount, select the tenure (1, 2, 3, or 5 years), and link your savings account for debit.
- Confirm the transaction. The TD is created instantly and reflects in your account dashboard.
You can also open a TD through the India Post Payments Bank (IPPB) app if your IPPB account is linked to a post office savings account.
Premature Withdrawal Rules
| When You Withdraw Early | What Happens |
|---|---|
| Within 6 months of opening | No interest paid. Only the principal is returned. |
| After 6 months but before 1 year (for 2, 3, or 5-year TD) | Interest paid at the Post Office Savings Account rate (currently 4%). |
| After 1 year but before maturity | Interest paid at 1% below the TD rate for the completed years. |
The 5-year TD has a lock-in of 6 months. Premature closure is allowed after that but the 80C tax deduction claimed earlier may be reversed and treated as income in the year of withdrawal.
Post Office FD vs Bank FD: Key Differences
| Feature | Post Office TD | Bank FD |
|---|---|---|
| Guarantee on deposits | Full guarantee by Government of India | DICGC insured up to Rs. 5 lakh per bank |
| Interest compounding | Quarterly compounding, annual payout | Varies: monthly, quarterly, or cumulative |
| Online access | Limited (DOP net banking / IPPB) | Full online access at most banks |
| Nomination | Available | Available |
| 5-year 80C benefit | Yes | Yes (only for 5-year tax saver FD) |
Who Should Choose the Post Office TD?
Post Office TD works well if:
- You want zero default risk and do not mind slightly less convenience.
- You want to invest more than Rs. 5 lakh in a single fixed deposit without worrying about insurance coverage limits.
- You live in a semi-urban or rural area where post office access is easier than a bank.
- You want to claim Section 80C deduction through the 5-year TD.
Frequently Asked Questions
Can I open a Post Office FD in the name of a minor child?
Yes. A guardian can open a TD in the name of a minor. Once the child turns 18, the account can be converted to the child’s name after completing KYC formalities at the post office.
What happens when my TD matures?
The post office sends an intimation near the maturity date. You can either withdraw the full amount or renew it for another term at the prevailing interest rate on the date of renewal. If you do nothing, most post offices auto-renew for the same tenure at the current rate.
Is TDS deducted on Post Office FD interest?
Yes, from April 2020, TDS at 10% applies if your total interest income from post office deposits exceeds Rs. 40,000 in a financial year (Rs. 50,000 for senior citizens). Submit Form 15G (or 15H for seniors) at the post office if your total income is below the taxable limit to avoid TDS deduction.
📩 If you notice any incorrect data in this guide or wish to share additional information, please write to us at info@indiansouls.in.
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