Post Office FD Calculator 2026: Time Deposit Maturity, Yield and Penalty
Calculate your National Savings Time Deposit maturity at the current 6.9 to 7.5 percent rates, see the true effective yield, compare annual payout versus reinvestment, and check your early-closure penalty.
National Savings Time Deposit Model: Quarterly Compounded Maturity Estimate
Big.js arithmetic, verified Q1 FY 2026-27 rates, Chart.js growth curveThe Post Office Time Deposit: A Sovereign-Backed Fixed Deposit
The Post Office Fixed Deposit, officially called the National Savings Time Deposit, is one of the safest places an Indian saver can park a lump sum. It is a small savings scheme run by India Post and backed by the full guarantee of the Government of India, which means your principal and the stated interest are as secure as money can be.
Tens of millions of households, from a retired teacher in Pune to a young family in Ahmedabad, use it as the bedrock of their savings precisely because it carries no market risk.
Unlike a bank fixed deposit, where the rate is set by each bank and varies from branch to branch, the Post Office Time Deposit pays a single uniform rate fixed by the Ministry of Finance. That rate is the same at every post office across the country, with no negotiation and no bank-by-bank difference.
This uniformity, combined with full capital safety, is what makes the scheme so trusted. This calculator shows you exactly what your deposit will grow to, what your true annual yield is, and what you would lose if you break the deposit early.
The scheme offers four tenures: 1, 2, 3, and 5 years. Longer tenures pay higher rates, and the 5-year deposit additionally qualifies for a tax deduction under Section 80C. Because the rate is
locked in at the time of deposit for the full term, the Time Deposit protects you from any future cut in small savings rates, a valuable feature when interest rates are expected to fall.
Current Post Office FD Rates for 2026
For the quarter April to June 2026 (Q1 FY 2026-27), the rates are 6.9 percent for 1 year, 7.0 percent for 2 years, 7.1 percent for 3 years, and 7.5 percent for 5 years. These rates have held steady since January 2024.
The Government reviews small savings rates every quarter, so while they are stable now, you should always confirm the current figure before you invest. Once you deposit, however, your rate is fixed for the entire chosen term regardless of later revisions.
P is your deposit, r is the annual rate as a fraction, and t is the tenure in years. The interest compounds quarterly, so the divisor and exponent both use 4. This quarterly compounding is why your effective yield is higher than the headline rate.
Who Should Choose a Post Office Time Deposit
The Time Deposit suits anyone who wants guaranteed, government-backed returns without market risk. It is ideal for a retiree protecting a lump sum, a family parking money set aside for a future goal, or a conservative saver who values certainty over the chance of higher but unpredictable returns. Because the rate is locked for the full term, it also appeals to savers who expect interest rates to fall and want to secure today’s rate.
Why the Effective Yield Beats the Headline Rate
Because interest compounds every quarter rather than once a year, the money you actually earn works out to more than the stated rate suggests. A headline rate of 7.5 percent, compounded quarterly, delivers an effective annual yield of about 7.71 percent. This gap between the nominal rate
and the effective yield is real money, and it is why our calculator shows you both figures. When you compare a Post Office Time Deposit against a bank FD, always compare effective yields, not just the headline numbers, or you will not be comparing like with like.
Quarterly compounded, annually paid. The Time Deposit has a subtle quirk: interest is calculated with quarterly compounding but is actually credited annually. This means your real return depends on whether you reinvest the annual interest or draw it as income. Our calculator shows both the reinvested maturity value and the annual income stream, so you can see the true picture either way.
How Quarterly Compounding Builds Your Corpus Faster
Most savers glance at the headline rate and assume that is what they earn. With the Post Office Time Deposit, the reality is better, because compounding happens four times a year rather than once. Understanding this mechanism helps you appreciate why the scheme is more generous than a simple annual-interest deposit and how to compare it fairly against other options.
Here is what happens under the hood. Every three months, the interest earned so far is added to your principal, and the next quarter’s interest is calculated on this larger base. Over a year, this means you earn interest on interest three extra times compared to annual compounding. The effect is small in the first quarter but grows steadily, and over a 5-year term it adds a meaningful sum to your maturity value.
Consider a Rs 1,00,000 deposit at 7.5 percent. Under simple annual interest, you would earn Rs 7,500 in the first year. Under quarterly compounding, the first year’s interest works out to about Rs 7,714, because each quarter’s interest joins the principal and earns more. That extra Rs 214 in year one keeps compounding, so by year five the difference has multiplied into a noticeably larger corpus. This is the quiet power of frequent compounding, and it needs nothing from you beyond leaving the money untouched so each quarter can do its work.
Reinvesting Versus Drawing the Interest
The scheme credits interest annually, and here you face a choice. If you leave the interest in the deposit, it keeps compounding and your maturity value is maximised. If you draw the interest each year as income, you get a steady annual payout but the withdrawn amount no longer earns anything. For a retiree needing regular income, drawing makes sense; for someone building wealth, reinvesting wins.
The gap between the two approaches widens with the size of the deposit and the length of the term. On a Rs 10 lakh 5-year deposit, reinvesting rather than drawing can leave you with tens of thousands of rupees more at maturity. Our calculator shows both figures side by side, so you can weigh the value of immediate income against the reward of patience and pick the path that fits your goals. As a rule of thumb, if you do not need the income now, reinvesting almost always leaves you better off at maturity, because compounding rewards patience more than any single feature of the scheme.
Comparing With a Bank Fixed Deposit
When you compare the Time Deposit against a bank FD, the compounding frequency matters as much as the rate. Many bank FDs compound quarterly too, but some compound annually, and cumulative bank FDs may reinvest at different intervals. Always ask for the effective yield, not just the headline rate, and check the compounding frequency. A Post Office deposit and a bank deposit at the same headline rate can deliver different real returns depending on how often interest is added.
Beyond the maths, weigh the safety difference. Bank deposits are insured only up to Rs 5 lakh per bank under deposit insurance, whereas the entire Post Office deposit carries a sovereign guarantee. For a large deposit, this difference in protection can matter more than a small rate gap. Many conservative savers accept a slightly lower headline rate at the Post Office in exchange for the complete capital safety a government guarantee provides.
Premature Closure Rules: What You Actually Get If You Break Early
Life does not always follow your investment plan, and sometimes you need your money before the deposit matures. The Post Office Time Deposit allows early closure, but with specific penalties that most calculators simply ignore.
Knowing these rules before you invest helps you choose a tenure you can realistically commit to, and knowing them before you close helps you decide whether breaking the deposit is worth the cost.
The Six-Month Lock and the Penalty Ladder
No premature withdrawal is permitted in the first 6 months. After that, the rules depend on your tenure. A 1-year deposit closed any time after 6 months earns only the Post Office savings account rate, currently 4 percent, not the Time Deposit rate.
For 2, 3, and 5-year deposits closed after completing at least one year, the interest for the completed years is calculated at 2 percent below the applicable Time Deposit rate, and any remaining part-period earns the savings rate.
The 2 percent penalty adds up. If you hold a 5-year deposit at 7.5 percent and close it after 3 completed years, you earn only 5.5 percent for those three years instead of 7.5 percent. On a large deposit, the difference between the penalised return and the full maturity value can run into thousands or even lakhs of rupees. Our premature closure mode shows you exactly how much you would forgo by breaking early.
When Breaking Early Still Makes Sense
Even with the penalty, early closure can be the right choice if the alternative is borrowing at a much higher rate. A personal loan at 14 percent costs far more than the 2 percent yield reduction on your deposit. Before you break a Time Deposit, compare the interest you would forgo against the cost of any loan you would otherwise take.
In many cases, especially for short remaining tenures, keeping the deposit and finding funds elsewhere is cheaper, but the penalty is modest enough that early closure is not the disaster people often fear.
Use a Loan Against the Deposit Instead
There is often a smarter alternative to breaking your Time Deposit: borrow against it. After 6 months, you can take a loan secured by your deposit while it continues earning the full locked-in rate. The loan interest is usually modest because the deposit acts as collateral, and you avoid the 2 percent penalty entirely. When your cash need is temporary, this route preserves your compounding and your rate.
Weigh the loan interest against the penalty you would otherwise pay. If you need funds for just a few months and the loan rate is reasonable, borrowing against the deposit almost always beats closing it. Reserve premature closure for situations where you need the money permanently or for a long period, where continuing to pay loan interest would cost more than the one-time penalty on early closure.
Tax Treatment of Time Deposit Interest Explained
The tax rules on Post Office Time Deposits trip up many savers, partly because the scheme behaves differently from a bank FD. Getting the tax right protects you from an unexpected notice and helps you plan your returns after tax, which is what actually matters for your pocket.
The interest you earn is fully taxable under the head Income from Other Sources, added to your total income and taxed at your slab rate. There is no special lower rate for Time Deposit interest. A saver in the 30 percent bracket keeps far less of the same interest than one in the 5 percent bracket, so your effective post-tax yield depends heavily on your tax slab.
The twist is that India Post does not deduct TDS. On a bank FD, tax is deducted at source once interest crosses a threshold, which acts as a reminder. With the Post Office, no such deduction happens, so the full interest reaches you and it is entirely your responsibility to declare it. Savers who forget this can accidentally underreport income and face interest and penalties later.
Claiming the Section 80C Deduction
If you invest in the 5-year Time Deposit under the old tax regime, the amount you deposit, up to Rs 1.5 lakh in a year, can be claimed as a deduction under Section 80C. This reduces your taxable income in the year of investment. Remember this is a deduction on the principal invested, not on the interest, and it applies only to the 5-year tenure and only under the old regime.
Under the new tax regime, which many taxpayers now default to, Section 80C deductions are not available, so the 5-year deposit loses its tax-saving edge and competes purely on its rate. Before choosing the 5-year deposit for tax reasons, confirm which regime you are on. If you are on the new regime, you might prefer a higher-yielding scheme rather than paying for a deduction you cannot use.
Estimating Your Post-Tax Return
To judge whether a Time Deposit is worth it, compute your return after tax. Take the effective yield, then subtract the tax at your slab. A 7.71 percent effective yield becomes about 5.40 percent after tax for someone in the 30 percent bracket, or about 7.32 percent for someone in the 5 percent bracket. Comparing post-tax yields across schemes, rather than headline rates, is the only fair way to decide where your money works hardest, and it often reshuffles the ranking you would get from headline rates alone.
Post Office FD Reference Tables for 2026
These tables summarise the current rates, maturity examples, penalty rules, and how the Time Deposit compares to other small savings schemes.
Current Time Deposit Rates and Effective Yield
| Tenure | Rate (p.a.) | Effective Yield | Section 80C |
|---|---|---|---|
| 1 year | 6.9% | 7.08% | No |
| 2 years | 7.0% | 7.19% | No |
| 3 years | 7.1% | 7.29% | No |
| 5 years | 7.5% | 7.71% | Yes |
Maturity of a Rs 1 Lakh Deposit
| Tenure | Rate | Maturity Value | Total Interest |
|---|---|---|---|
| 1 year | 6.9% | Rs 1,07,081 | Rs 7,081 |
| 2 years | 7.0% | Rs 1,14,888 | Rs 14,888 |
| 3 years | 7.1% | Rs 1,23,508 | Rs 23,508 |
| 5 years | 7.5% | Rs 1,44,995 | Rs 44,995 |
Premature Closure Penalty Rules
| Situation | Interest Applied |
|---|---|
| Closed before 6 months | Not allowed, no interest |
| 1-year TD closed after 6 months | Savings rate (4%) |
| 2, 3, 5-year TD closed after 1 year | 2% below TD rate for completed years |
| Part-period beyond completed years | Savings rate (4%) |
Time Deposit vs Other Post Office Schemes
| Scheme | Rate (2026) | Best For |
|---|---|---|
| 5-year Time Deposit | 7.5% | Lump sum, tax saving |
| Senior Citizen Savings Scheme | 8.2% | Retirees 60+ |
| Sukanya Samriddhi Yojana | 8.2% | Girl child savings |
| National Savings Certificate | 7.7% | 5-year tax saving |
| Public Provident Fund | 7.1% | Long-term tax-free |
Worked Time Deposit Scenarios from Pune, Ahmedabad and Hyderabad Savers
These three examples show how the Time Deposit plays out for reinvestment, annual income, and early closure.
Meera, a retired schoolteacher in Pune, places Rs 5,00,000 in a 5-year Time Deposit at 7.5 percent. With quarterly compounding, her deposit grows to Rs 7,24,974 at maturity, earning Rs 2,24,974 in interest. Her effective yield is 7.71 percent, comfortably above the headline rate.
As a 5-year deposit, it also qualifies for a Section 80C deduction, which reduces her taxable income if she uses the old tax regime.
Rajesh, who runs a shop in Ahmedabad, wants steady income rather than a lump sum at the end. He deposits Rs 10,00,000 in a 5-year Time Deposit. Instead of reinvesting, he draws the annual interest of about Rs
77,136 each year, giving him Rs 3,85,680 in income over five years while his Rs 10 lakh principal stays intact and is returned at maturity. This suits his need for a predictable yearly top-up to his business income.
Sania, an IT professional in Hyderabad, opened a 5-year Time Deposit of Rs 2,00,000 at 7.5 percent but needs the money after 3 years for a home down payment. Because she closes after 3 completed years,
the rate drops 2 percent to 5.5 percent for those years, giving her about Rs 33,000 in interest instead of the higher amount she would have earned at the full rate. She receives Rs 2,33,000 in total.
Six Practical Tips to Get the Most from Your Time Deposit
Ladder Your Deposits Across Tenures
Instead of locking one large sum in a single 5-year deposit, split it across 1, 2, 3, and 5-year Time Deposits. As each shorter deposit matures, you gain access to some funds while the rest keeps earning the higher long-term rate. This laddering balances liquidity against return and means you always have a deposit maturing soon if you need cash.
Choose 5 Years for the Tax Deduction
Only the 5-year Time Deposit qualifies for a Section 80C deduction of up to Rs 1.5 lakh, and only under the old tax regime. If you are still on the old regime and
have not exhausted your 80C limit, the 5-year deposit gives you both the highest rate and a tax break. Under the new regime, the deduction does not apply, so weigh the rate alone.
Compare Effective Yield, Not Headline Rate
Because Post Office interest compounds quarterly, the effective yield is higher than the stated rate. When comparing against a bank FD, always compare effective yields. A bank FD at 7.5 percent with annual compounding earns less than a Post Office TD at 7.5 percent with quarterly compounding, even though the headline rates look identical.
Report Interest Even Without TDS
India Post does not deduct TDS on Time Deposit interest, unlike most banks. This is convenient but does not make the interest tax-free. You must report the interest under Income from Other Sources in your tax return and pay tax at your slab rate.
Keep a record of the interest credited each year so you do not underreport and face a notice later.
Lock In Before a Rate Cut
Your Time Deposit rate is fixed for the full term at the time you invest. If small savings rates look likely to fall in an upcoming quarterly review, opening a longer deposit now locks in the current higher rate for years. Conversely, if rates seem set to rise, a shorter tenure lets you reinvest sooner at the new higher rate.
Consider SCSS or SSY for Higher Rates
If you are a senior citizen, the Senior Citizen Savings Scheme pays 8.2 percent, well above the Time Deposit. If you are saving for a girl child, Sukanya Samriddhi Yojana also pays 8.2 percent and is tax-free. Check whether you qualify for these higher-yielding schemes before defaulting to a Time Deposit. As per India Post, all are government-backed.
Post Office FD Quick Reference for 2026
| Question | Answer |
|---|---|
| Official scheme name | National Savings Time Deposit |
| Tenures available | 1, 2, 3, 5 years |
| Rate 1 year | 6.9% |
| Rate 2 years | 7.0% |
| Rate 3 years | 7.1% |
| Rate 5 years | 7.5% |
| Compounding | Quarterly |
| Interest paid | Annually |
| Effective yield (5yr) | 7.71% |
| Minimum deposit | Rs 1,000 (multiples of Rs 100) |
| Maximum deposit | No upper limit |
| Section 80C | Only 5-year TD (old regime) |
| TDS deducted | No (interest still taxable) |
| Premature closure | After 6 months, with penalty |
| Penalty (2/3/5yr) | 2% below TD rate |
| Rate revision | Every quarter by Govt |
Frequently Asked Questions on Post Office Fixed Deposits
What is the Post Office FD interest rate in 2026?
How is Post Office FD maturity calculated?
Is Post Office FD interest compounded quarterly or annually?
Which Post Office FD tenure qualifies for tax benefits?
Does the Post Office deduct TDS on FD interest?
Can I close a Post Office FD before maturity?
What is the minimum and maximum deposit?
How does Post Office FD compare to a bank FD?
Do senior citizens get a higher Post Office FD rate?
Can I take a loan against my Post Office FD?
What happens to my FD when it matures?
Is the annual payout the same as the maturity value?
Can I open a Post Office FD online?
Can I hold multiple Post Office Time Deposits?
What is the difference between Time Deposit and Recurring Deposit?
Are Post Office FD rates fixed for the whole tenure?
Is Post Office FD safe?
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Disclaimer and Editorial Transparency
This Post Office FD calculator is provided for educational and illustrative purposes only. It uses the National Savings Time Deposit rates notified for Q1 FY 2026-27 (April to June 2026): 6.9 percent for 1 year, 7.0 percent for 2 years, 7.1 percent for 3 years, and 7.5 percent for 5 years, compounded quarterly and paid annually.
Small savings rates are revised every quarter by the Ministry of Finance, and scheme rules can change, so you should confirm current figures on the official India Post website before investing.
Maturity and interest figures are computed with quarterly compounding and rounded. Premature closure calculations follow the published penalty rules but the exact amount payable is determined by India Post at the time of closure. This tool does not constitute financial or tax advice.
The interest earned is taxable in your hands even though India Post does not deduct TDS. For decisions specific to your situation, consult a qualified financial adviser.
Official scheme details and current rates are available at indiapost.gov.in and small savings notifications at nsiindia.gov.in. CalcWise.Finance receives no compensation for calculator results and performs all computations locally in your browser without storing any personal financial data.