Worked example
Example with the default numbers — change them above.
Amount you deposit: ₹1,00,000 · Tenure: 5 years (7.5%) · Interest: Paid out every year (how the scheme works)
A 5-year post office time deposit of ₹1 L at 7.5% pays about ₹7,714 interest every year, ₹38,568 in all, and returns your ₹1 L at the end.
| Interest every year | ₹7,714 · Paid out; deposit stays the same |
|---|---|
| Amount you deposit | ₹1 L · Paid once, at the start |
| Total interest | ₹38,568 · 28% of money plus interest |
| Interest a year as % of deposit | 7.71% · 7.5% compounded quarterly |
How the Post Office TD Calculator works
- Enter the amount and choose a tenure. The calculator picks the notified rate for that tenure from the current quarter.
- Interest is worked out every quarter at one fourth of the yearly rate.
- Within each year the four quarters compound, and that year's interest is paid out to you at the end of the year. The original deposit stays unchanged and comes back at maturity.
- Interest you leave uncollected earns nothing more inside the deposit. The reinvest option shows what you would have if you put each year's interest back into a deposit at the same rate yourself.
- The result shows the yearly interest, the total interest, the yearly interest as a percentage of the deposit, and a year-by-year table.
Post office time deposit interest
Interest paid each year = P × ((1 + r ÷ 4)^4 − 1)
Total received = P + years × interest paid each year
P = amount deposited, r = yearly rate as a decimal
Only if you reinvest each year's interest yourself at the same rate: value = P × (1 + r ÷ 4)^(4 × years)Assumptions and limits
- The notified rate for the tenure applies for the whole deposit. As per the scheme rules, the rate in force on the day you open the deposit is the one that stays; later quarterly changes do not affect it.
- Interest is compounded quarterly within each year and paid out at the end of each year, as the scheme rules say. The default view assumes you spend or move each year's interest; the reinvest view assumes you put it back into a deposit at the same rate, which the scheme does not do for you.
- Quarters and years are counted from the day you open the deposit. After maturity the deposit can be extended for the same tenure; extensions are not modelled.
- The calculation does not deduct tax. Post office deposit interest is taxable, and tax may be deducted at source above a yearly threshold. Only the 5-year deposit can qualify for a Section 80C (now section 123 of the Income-tax Act, 2025) deduction, under the old tax regime.
- Early closure is not modelled. It is not allowed in the first six months; a 5-year deposit opened on or after 10 November 2023 cannot be closed before 4 years, and then pays only the post office savings rate.
Frequently asked questions
How is post office FD (time deposit) interest calculated?
Interest is worked out every quarter at one fourth of the yearly rate, compounded over the four quarters, and paid to you once a year. Each year's interest is the amount times ((1 + rate ÷ 4)^4 − 1). For example, ₹1,00,000 for 5 years at 7.5% pays about ₹7,714 a year, so you receive about ₹1,38,568 in all including your deposit back. Interest you do not withdraw earns no extra interest inside the deposit.
What is the current post office time deposit interest rate?
The post office time deposit rate is 7.5% a year for Q3 FY2026-27, effective 1 October 2026. The Finance Ministry reviews small-savings rates every quarter, so the next change could come around 1 January 2027. That is the 5-year rate. The 1, 2 and 3-year rates are 6.9%, 7% and 7.1%, and each stays fixed for the tenure you choose. We last checked this rate on 21 October 2026; confirm with India Post or your bank before you invest.
Is the post office FD rate higher than a bank FD?
It can be, but it depends on the bank and tenure. The 5-year post office rate is 7.5% this quarter and is set by the government for everyone, while bank FD rates differ by bank, tenure and customer type. Compare the effective yearly return and the tax treatment using the FD calculator.
Is interest paid yearly or at maturity in a post office time deposit?
Interest is calculated every quarter but paid out to you once a year, for example into your savings account. If you do not withdraw it, you do not earn interest on it inside the deposit. Many online calculators show a larger figure with quarterly compounding all the way to maturity; you only get that if you reinvest each year's interest yourself at the same rate, which the reinvest option here shows.
Does the 5-year post office FD save tax?
Under the old tax regime, a 5-year post office time deposit can qualify for a deduction under Section 80C (now section 123 of the Income-tax Act, 2025), up to the overall limit. The interest itself is taxable. The deduction is generally not available under the new tax regime. Tax rules change with each Budget, so check the latest position.
Can I break a post office time deposit early?
Not in the first six months. Closed between six and twelve months, it earns the post office savings account rate. A 2 or 3-year deposit closed after a year earns two percentage points less than the time-deposit rate for the period completed. A 5-year deposit opened on or after 10 November 2023 cannot be closed before 4 years, and then earns the post office savings account rate; older 5-year deposits follow the earlier rule. Interest already paid above the reduced rate is taken back from what you receive.
Sources
- National Savings Institute (Ministry of Finance): Time Deposit Account scheme details
- India Post: current interest rates on post office savings schemes
- Income Tax Department: Income-tax Act, 2025, section 123 – ₹1.5 lakh deduction for specified savings (old section 80C)
Logic and rates last verified on .
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