Post Office Time Deposit Scheme

What is the Post Office Time Deposit Scheme?

The Post Office Time Deposit Scheme is a fixed-income, small savings scheme offered by India Post. Similar to a bank fixed deposit, it allows depositors to invest a lump sum for a fixed tenure and earn a guaranteed interest income. The scheme is backed by the Union Finance Ministry, and offers stability, flexible investment options, and competitive Post Office FD interest rates. The current interest rate ranges from 6.90% to 7.50% for tenures ranging from 1 year to 5 years.

Key Features & Benefits of the Post Office Time Deposit Scheme

Below are some of the popular features of the post office time deposit scheme, including tenure options, interest compounding, and tax benefits.

1. Flexible Tenure Options

   Depositors can choose from four tenure options: 1, 2, 3, or 5 years. Each tenure has a different interest rate, and longer tenures typically offer better returns. Investors can also open multiple time deposit accounts for different tenures.

2. Low Minimum Deposit

   Investors can open a time deposit account with a minimum deposit of Rs 1000. Additional deposits can be made in multiples of Rs 1000, with no upper limit.

3. Premature Withdrawal

   Premature withdrawals are allowed after 6 months, offering liquidity to depositors in case of a financial emergency.

4. Interest Compounding

   Interests in the post office time deposit scheme compound quarterly, while the payout is made annually. This payout model makes it suitable for investors who want to reinvest returns for compounding over the long term while receiving yearly interest income.

5. Interest Post Maturity

   No interest accrues post-maturity if the amount is not withdrawn. The account can be renewed at the prevailing rate if the post office has core banking.

6. Account Portability & Nomination

   Post Office Time Deposit accounts can be easily transferred from one post office to another across India.Plus, a nomination facility is available at the time of opening or at any later time, allowing smooth transfer of funds to nominees in case of the depositor's demise.

7. Tax Benefits

   The 5-Year Time Deposit scheme is eligible for tax deduction under Section 80C, up to a limit of ₹1.5 lakh per annum. However, interest earned is fully taxable, and TDS is applicable if the interest exceeds the annual exemption limit.

Post Office Time Deposit Interest Rates

• Post office FD interest rates are updated quarterly. 
• Interest on these deposits is compounded quarterly but paid out annually.
• The rates are influenced by government securities (G-secs) yields.
• For 5-year deposits, an additional 0.25% spread over G-sec yields is applied.
• Shorter-term deposits (1-year, 2-year, and 3-year) do not include this additional spread.

The table below shows the interest rates for the Post Office Time Deposit scheme applicable from 1st July 2025 to 30th September 2025:

Note: Post Office Time Deposit interest rates w.e.f. 1st July 2025. Rates applicable till 30th September 2025 (interests compound quarterly)

Eligibility Criteria for Time Deposit in Post Office

Anyone who is looking forward to opening the account should meet the following criteria:

• Any citizen of India 
• Joint account with up to three adults.
• A minor who is 10 years of age and operates it by themselves.
• A parent or guardian can open a Time Deposit account on behalf of a minor.

NOTE: 

• Non-resident Indians (NRIs) are not eligible to open Post Office Time Deposit accounts.
• Groups or funds, such as welfare funds, trust funds, regimental funds and institutional account holders also cannot access the post office time deposit scheme.

Documents Required

The following are the important documents that need to be submitted to open the account:

• Filled application form of Post Office Time Deposit Scheme
• Passport-sized photographs
• Identity Proof: PAN card, Aadhar card or Voter ID
• Address Proof: PAN card, Ration card, Aadhar card, Voter ID or Driving license
• Income Proof: Salary slips of the last three months or statement of the bank account of the last six months

How to Open the Post Office Time Deposit Account?

An individual can open the post office time deposit account at any of the post offices in the country both offline and online. 

1. Opening the POTD Account Online

   • Visit the official website of India Post and sign in to the account using valid credentials.
   • Under the section of ‘General Services’, simply click on the option of ‘Service Request’
   • To request to open the Post Office Time Deposit Account, click on the tab ‘New Request’.
   • Enter all the details correctly while filling out the form.
   • Make the initial contribution sum and then click on the tab ‘Submit’ for the form to be submitted successfully.
   • A confirmation message regarding the same will be shared on the email ID registered.

2. Opening the POTD Account Offline

   • With all the important details, complete the application form
   • While submitting the form attach all the KYC documents and a passport size photograph.
   • The individual should visit the post office where a savings account has been maintained.
   • Submit the application form by making the initial contribution sum of Rs 1000.

Post Office Time Deposit vs. Bank Fixed Deposit

Post Office Time Deposit vs. Other Post Office Savings Schemes in 2025

Conclusion 

The Post Office Time Deposit Scheme, or the National Savings Time Deposit Account, is a fixed-income savings scheme offering assured returns for tenures of 1 to 5 years. The interest rates range from 6.90% to 7.50% p.a., with a minimum deposit of ₹1,000. The scheme offers quarterly compounding with annual payouts, and provides tax benefits under Section 80C for 5-year deposits.