Beginner guide · 4-minute read
Post Office Time Deposit, explained simply
A Post Office Time Deposit (TD) is the post office's version of a fixed deposit: you invest once for 1, 2, 3 or 5 years at a rate set by the government.
Checked on 14 Oct 2026 against the Ministry of Finance small savings rate notice for Oct–Dec 2026.
In one minute
- Who runs it
- The Government of India, through post offices and some banks.
- What it pays
- 1 year 6.9%, 2 years 7%, 3 years 7.1%, 5 years 7.5% (Oct–Dec 2026).
- How much
- From ₹1,000, with no upper limit.
- Interest
- Worked out every quarter, paid once a year.
How it works, with real numbers
Invest ₹1,00,000 for 5 years at 7.5%. You'd receive about ₹7,714 in interest every year, ₹38,568 in all, and get your ₹1,00,000 back at the end.
The interest is taxed at your slab rate. At 30% plus cess, about ₹2,407 of each year's interest goes in tax.
How the Post Office 5-year Time Deposit rate has changed
Post Office 5-year Time Deposit pays 7.5% today, unchanged since April 2023. Since it began in March 1981, it has ranged from 6.7% (2020–2022) to 13.5% (1991–1993).
- The rate on the day you invest stays fixed for your whole term. Later changes, up or down, don't affect money you've already put in.
- Rates were higher in the 1980s and 1990s, when prices were also rising faster. What counts is how far the rate stays ahead of inflation (5.54% now).
See every rate change (25)
| Period | Rate a year |
|---|---|
| Apr 2023 – now | 7.5% |
| Jan 2023 – Mar 2023 | 7% |
| Apr 2020 – Dec 2022 | 6.7% |
| Jul 2019 – Mar 2020 | 7.7% |
| Oct 2018 – Jun 2019 | 7.8% |
| Jan 2018 – Sep 2018 | 7.4% |
| Jul 2017 – Dec 2017 | 7.6% |
| Apr 2017 – Jun 2017 | 7.7% |
| Oct 2016 – Mar 2017 | 7.8% |
| Apr 2016 – Sep 2016 | 7.9% |
| Apr 2014 – Mar 2016 | 8.5% |
| Apr 2013 – Mar 2014 | 8.4% |
| Apr 2012 – Mar 2013 | 8.5% |
| Dec 2011 – Mar 2012 | 8.3% |
| Mar 2003 – Nov 2011 | 7.5% |
| Mar 2002 – Feb 2003 | 8.5% |
| Mar 2001 – Feb 2002 | 9% |
| Jan 2000 – Feb 2001 | 10.5% |
| Jan 1999 – Jan 2000 | 11.5% |
| Sep 1993 – Dec 1998 | 12.5% |
| Oct 1991 – Sep 1993 | 13.5% |
| Apr 1991 – Sep 1991 | 11.5% |
| Apr 1987 – Mar 1991 | 11% |
| Mar 1983 – Mar 1987 | 11.5% |
| Mar 1981 – Feb 1983 | 10.5% |
Source: National Savings Institute, Ministry of Finance, rates since launch; Oct–Dec 2026 from the Ministry's latest notice.
Pros and cons
Good things
- Government-backed. As safe as it gets in India.
- Often pays more than big banks. 7.5% for 5 years, against SBI's 6.05%.
- Rate locked. Your rate stays the same for the whole term.
- Tax deduction on the 5-year deposit. Counts towards the ₹1.5 lakh old-regime deduction.
Things to watch
- Taxed every year. The interest is added to your income at your slab rate.
- Only four terms. 1, 2, 3 or 5 years; nothing in between.
- Lower interest if you close early. And not at all in the first 6 months.
- Interest doesn't compound across years. It's paid out yearly unless you reinvest it yourself.
Is it right for you?
Mistakes to avoid
- Letting yearly interest sit idle. Have it credited to a Post Office savings account or RD so it keeps earning.
- Assuming every TD saves tax. Only the 5-year deposit counts for the deduction.
How to start
- Visit a post office (or use India Post's online banking if you have a Post Office savings account).
- Fill in the form and choose the term.
- Complete KYC with PAN and Aadhaar.
- Pay by cheque or from your savings account, and add a nominee.
Words you'll see
- Time deposit
- Another name for a fixed deposit.
- Term
- 1, 2, 3 or 5 years.
- Premature closure
- Ending the deposit before its term, at a lower rate.
This guide explains how things work. It is not advice on what you should invest in. NetReturns is not SEBI-registered.