Post Office Time Deposit Schemes – Interest Rate, Eligibility & Benefits

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Post Office Time Deposit Account (POTD), also known as National Savings Time Deposit Account, is one of the most well-known investment schemes offered by the India Post. While the scheme is open to all individuals, it is particularly popular in rural and remote areas of the country that are relatively under-banked and have limited access to investment products.

The Post Office Time Deposit scheme offers different tenure options of 1, 2, 3, or 5 years and requires a minimum deposit of Rs. 1,000 with no maximum upper limit. Interest is compounded quarterly and paid annually. Moreover, the 5-year time deposit also offers tax benefits under Section 80C, making it ideal for conservative investors.

Types of Post Office Time Deposit Scheme Accounts

The National Savings Time Deposit scheme offers four account options with varying maturity periods of 1 year, 2 years, 3 years and 5 years. Each of these account options comes with a different interest rate depending on the selected tenure. This flexibility lets investors choose a plan that best meets their financial goals and time horizons.

Moreover, a POTD account can be maintained either individually or jointly by a group of up to 3 persons. A guardian can also maintain an account on behalf of a minor or a person of unsound mind. However, minors above 10 years can have an account in their own name. Also, there is no limit on the number of POTD accounts that a person can open.

Post Office Time Deposit Scheme Interest Rates

The Indian Finance Ministry reviews the interest rates on the scheme in the beginning of every quarter of the financial year. The interest rate is decided based on the yield on government securities and usually has a spread over the government-sector yield.

Following are the interest rates of the post office time deposit account applicable from 1st July 2025 to 30th September 2025*:

*The above interest rates are reviewed every quarter by the Finance Ministry

In case you do not wish to withdraw the interest annually, you can instruct the post office to redirect it to your post office savings account, that earns 4% interest p.a. However, this cannot be done in case of POTD with 1 year tenure.

Alternatively, you may also choose to redirect this interest to a 5-year recurring deposit account in the same post office or bank in lieu of payment of 12 monthly installments. In this case, the depositor will be required to give a fresh application to the office or bank before the due date on which interest falls due for payment.

Features of Post Office Time Deposit Scheme

Mentioned below are the key features of the post office time deposit scheme-

• Deposits under post office time deposit schemes can have tenure of 1, 2, 3 or 5 years, and only one deposit can be made in one account
• This post office scheme promises assured returns on the account holder’s investments
• The time deposit accounts can be easily transferred from one post office to another
• Time deposit accounts can be either solely operated or jointly held
• Account holders can extend the duration of a time deposit account upon its maturity
• If proceeds of a mature account are not withdrawn, the account will be automatically renewed for the original deposit tenure at applicable interest rates as on the date of maturity
• There is no cap on the number of time deposit accounts that can be opened
• Minimum deposit required to invest in the Post Office Time Deposit scheme is Rs. 1,000. However, it must be noted that the amount to be deposited should be in multiples of Rs. 100 only. If not, the amount in multiples of Rs. 100 will be retained in the account and the balance will be refunded without any interest
• The central government has recently authorized all public sector banks and some private banks like ICICI Bank, Axis Bank, HDFC Bank, etc. to allow investors to open POTD accounts
  
• Investors may consider POTD investments as alternates to bank fixed deposits.

Eligibility Criteria

In order to be eligible to open a Post Office Time Deposit Account, the following criteria must be taken into account-

• All resident Indians can open and operate this account either singly or jointly (up to 3 adults)
  
• A minor aged 10 years or more can open and also operate this account
• A parent/guardian can open a Post Office Time Deposit account on behalf of a minor or on behalf of person of unsound mind
  
• Non-resident Indians are not allowed to open a Post Office TD account

The following groups/funds are not allowed to avail the Post Office Time Deposit Scheme-

• Institutional account holders
• Trust funds
• Regimental funds
• Welfare funds

Aadhaar and PAN Now Mandatory for POTD Account

• As per the recent notification issued by the Ministry of Finance, it is mandatory to provide your PAN and Aadhaar number to open a new Post Office Time Deposit account. If you have not been assigned an Aadhaar, you need to provide proof of application of enrollment for Aadhaar or enrollment ID at the time of opening the account and furnish the Aadhaar number to the accounts office within 6 months from the date of opening the account.
• In case you already have an existing National Savings Time Deposit account and have not submitted your Aadhaar number, you need to submit the within a period of 6 months with effect from 1st April 2023. Moreover, if you have not submitted your PAN at the time of opening the account, you need to submit your PAN within a period of 2 months from the date of happening of any of the following events, whichever is earliest, namely:

– The balance at any point of time in the account exceeds Rs. 50,000

–  The aggregate of all credits in the account in any financial year exceeds Rs. 1 lakh

–  The aggregate of all withdrawals and transfers in a month from the account is more than Rs. 10,000

• If you fail to submit Aadhaar within the specified period of 6 months and PAN within the specified period of 2 months, it will result in the account becoming inoperational till the time Aadhaar number and/or PAN is submitted to the accounts office

Note:The information has been taken from The Gazette of India. To read more, visit https://egazette.nic.in/WriteReadData/2023/244822.pdf

Documents Required

In order to open a term deposit with India Post, you must furnish the following documents-

• SB3
• SB13 (pay-in slip)
• Specimen Signature Slip

How to Apply for Post Office Time Deposit Scheme

Online Process:

You can open a Post Office Time Deposit Account online only if you have an existing Post Office Savings Account and are registered for Indian Post Office internet banking services. Here is a step-by-step guide to so:

1. Visit the Indian Post eBanking website
2. Use your registered “User ID” and captcha code and click on “Log In”
3. Under the General Services tab, click on the ‘Service Request’ option
4. Follow the on-screen directions to initiate the Post Office Time Deposit opening request.

Offline Process:

To open a Post Office Time Deposit account offline follow the below-mentioned steps:

1. Download the POTD application form or collect one from a post office near you
2. Submit the duly-filled form and the documents mentioned above along with a minimum of Rs. 1,000 at the post office to open your POTD account

Taxation Benefits under POTD

Small saving investments in post offices do not involve any tax deduction at source (TDS). It must be noted that the interest earned on these investments is added to the depositor’s total annual income in the year of receipt and is liable to be taxed as per the tax rate of the investor.

However, deposits made for the 5-year tenure are eligible for tax benefits under Section 80C of the Income Tax Act.

Premature Withdrawal of POTD Funds

Post office time deposit account permits its account holders to withdraw funds even before its maturity. The only applicable condition is that a minimum of 6 months must have been passed from the date of first deposit in order to qualify for premature withdrawal. The following are key terms and conditions in case of premature withdrawal of a Time Deposit-

• If premature withdrawal of 1/2/3 or 5 year POTD is made after completion of 6 months but before completion of 1 year from date of time deposit account opening, simple interest is payable as per Post Office Savings Account interest rate
• If premature withdrawal of 2/3/5 year TD account is done after 1 year from date of account opening, the applicable interest rate is 2% lower than the TD interest rate (that is, 1/2/3 years) for completed years and for part period less than a year, Post Office savings interest rate will be applicable. 

Who Should Invest in POTD

Investors who are looking for alternatives to Bank Fixed Deposits may consider investing in Post Office Time Deposit Schemes as the latter offers higher interest rates than the ones offered in fixed deposits.

Additionally, if you are an ultra conservative investor with zero tolerance of risk and assured returns, you may choose to invest in these schemes.

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Advantages of Post Office Time Deposit Schemes

The following are key benefits of investing in a National Savings Time Deposit account:

• Post Office Time Deposit Scheme provides guaranteed return on investment
• 5 Year Time Deposits qualify for tax deduction under Section 80C of the Income Tax Act
• Even minors aged 10 years and above can operate the account by themselves
• Nomination facility is available
• The investments are quite flexible and be made with an amount as low as Rs. 1,000 and with no maximum investment limit
• Accounts can easily be transferred from one post office to another
• Premature withdrawal of deposits is allowed
• POTD investments are considered safer than FDs as the principal amount invested and the interest earned are backed by sovereign guarantee
• There is no cap on the maximum number of accounts that can be opened in any post office

Read More: Post Office Investment: Saving Schemes & Interest Rates

FAQs

Q. What is the minimum amount required to open a POTD?

Ans. A Post Office Term Deposit can be opened with an amount as low as Rs. 1,000.

Q. Can I avail tax benefits by investing in POTD?

Ans. Investors can avail tax benefits in POTD only if the tenure of the deposit is 5 years.

Q. Can I transfer my term deposit from one post office to another?

Ans. Yes, you can do so by submitting either a manual application to be post office or by using the prescribed SB10(b) form.

Q. Is premature closure of POTD allowed?

Ans. Yes, you can close your term deposit prematurely. To do so, your account should have been active for the last 6 months. If the withdrawal is made between 6 months and 1 year, simple interest is payable as per Post Office Savings Account interest rate. If the withdrawal is made after 1 year of opening the account, the applicable interest rate would be 2% lower than the interest rate corresponding to the tenure the account was originally booked for completed years and for part period less than a year post office savings account interest rate will be applicable.

Q. Can I extend my POTD account?

Ans. Yes, you can extend your time deposit account for another tenure for which the account was initially opened. You can extend your POTD account from the date of maturity within the following prescribed period:

• 1 Year TD= within 6 months of maturity
• 2 Year TD= within 12 months of maturity
• 3/5 Year TD= within 18 months of maturity

Q. Can I pledge or transfer my POTD account as security?

Ans. Yes, you can pledge or transfer your time deposit account as security by submitting prescribed application form at concerned Post Office supported by an acceptance letter from the pledgee. Moreover, transfer/pledging can be made to the following authorities:

• The President of India/Governor of the State
• RBI/Co-operative Society/Co-operative Bank/Scheduled Bank
• Govt. Company/Local Authority/Corporation (public/private)
• Housing finance company

Q. Is Post Office Time Deposit safe?

Ans. Yes, since Post Office Time Deposit is backed-up by the government, it is completely safe and offers fixed returns.