The Post Office Time Deposit (TD) — commonly called the Post Office FD — is a straightforward, sovereign-backed deposit across four fixed tenures. But one detail trips people up more than any other: the 5-year TD has meaningfully stricter withdrawal rules than the shorter ones, something most calculators don’t flag clearly.
[Use the Post Office TD Calculator above ↑] — enter your amount and tenure to see the exact maturity value.
| Tenure | Interest Rate | 80C Eligible? |
|---|---|---|
| 1 year | 6.9% | No |
| 2 years | 7.0% | No |
| 3 years | 7.1% | No |
| 5 years | 7.5% | Yes |
These are the October–December 2026 quarter rates, unchanged since January 2024. Interest is compounded quarterly but paid out annually, which pushes the effective yield slightly above the headline rate — a 7.5% TD actually works out to about 7.71% effective annual return because of this compounding.
For 1, 2, and 3-year TDs, the premature withdrawal rules are fairly forgiving once you’re past the first year: close early, and you get the completed-tenure rate minus a 2% penalty. Not ideal, but not harsh either.
The 5-year TD works completely differently. For deposits opened on or after 10 November 2023, no withdrawal is permitted before 4 years at anything above the Post Office Savings Account rate (currently 4%) — regardless of how close you are to that 4-year mark. Break it at year 3, and you earn savings-account interest for the entire period, not a reduced TD rate. Only after completing 4 years does closing early become genuinely reasonable, paying the 4-year rate instead of the full 5-year rate.
This makes the 5-year TD a genuine 4-year minimum commitment in practice, not just on paper — worth knowing before you lock in a large sum you might need access to sooner.
Only the 5-year TD qualifies for a Section 80C deduction (section 123 under the Income-tax Act, 2025) on the deposit amount, up to ₹1.5 lakh per year — matching how 5-year tax-saver bank FDs work. The 1, 2, and 3-year TDs offer no tax deduction at all. Across every tenure, the interest earned is fully taxable at your income slab rate, and — unlike a bank FD — the post office generally doesn’t deduct TDS on Time Deposit interest (confirm with your post office), so you are responsible for declaring it yourself.
| Feature | Post Office TD | Bank FD |
|---|---|---|
| Backing | Sovereign (Government of India) | DICGC insured up to ₹5 lakh per bank |
| 5-year rate | 7.5% | ~5.9-6.5% at large banks; up to ~8.25% at some small finance banks |
| Premature exit (before 4 yrs, 5-yr tenure) | Savings rate only — strict | Varies by bank, usually a smaller penalty |
| 80C benefit | Only the 5-year tenure | Only 5-year tax-saver FDs |
The sovereign guarantee is the real differentiator — a Post Office TD carries zero credit risk regardless of amount, while a bank FD above ₹5 lakh carries some exposure to that bank’s financial health. See our bank FD rates guide to compare current options directly.
What is the current Post Office TD interest rate?
6.9% for 1 year, 7.0% for 2 years, 7.1% for 3 years, and 7.5% for 5 years, for the October–December 2026 quarter.
Can I withdraw my 5-year Post Office TD before maturity?
Only at the Post Office Savings Account rate (4%) if withdrawn before 4 years — a much stricter penalty than shorter TDs. After 4 years, you get the 4-year rate.
Which Post Office TD tenure gets a tax deduction?
Only the 5-year TD qualifies for Section 80C, up to ₹1.5 lakh per year. The 1, 2, and 3-year tenures don’t.
Is Post Office TD interest taxable?
Yes, fully, at your income slab rate across all tenures — though the post office generally doesn’t deduct TDS on it, so you must declare it yourself.
See also our POMIS calculator and SCSS calculator for other government-backed options.
Sources: India Post official savings schemes page, Finance Ministry quarterly small savings notifications. Rate confirmed for the October–December 2026 quarter by the Finance Ministry’s notification of 30 September 2026. Rates are reviewed quarterly, so confirm the current figure before depositing.
