Post Office Fixed Deposit Interest Rates 2025: Latest Returns, Tax Rules And More
With over 1.55 lakh post offices, India has the largest postal network1. While traditionally known for delivering mail, India Post has evolved into a vital financial services provider, especially in rural and semi-urban areas where access to banks is limited.
Today, post offices offer a wide range of financial products — from savings accounts and recurring deposits to fixed deposits and monthly income schemes — making them an essential part of India’s financial inclusion efforts. These schemes are backed by the government, offering safe and reliable investment options to millions of Indians.
A fixed deposit represents one of the most widely used and traditional forms of investing. It refers to a financial instrument that allows individuals to invest a fixed sum of money at a predetermined rate of interest for a specific period of time.
This blog explores the post office fixed deposit in detail. It also compares the post office vs bank FD interest rates to determine their differences and benefits for a target audience.
What Is A Post Office FD?
A post office fixed deposit is a savings option offered by the Indian Postal Service, or India Post. It's frequently called a Post Office Time Deposit. This fixed deposit enables people to deposit a lump sum amount for a certain tenure at a constant post office fixed deposit interest rate. It is one of the popular options for conservative investors looking for capital protection and consistent profits.
There are multiple post office schemes. However, the post office time deposit scheme and the post office monthly income scheme are the most popular due to their unique features. One such feature is the government guarantee. The central government ensures the safety and security of FDs made with the post office.
Key Features Of Post Office Fixed Deposit
Fixed deposit schemes are offered by different institutions. However, the post office fixed deposits or the post office savings scheme have certain unique characteristics that differentiate them from other providers.
Some features of time deposits are listed below :
| Particulars | Explanation |
| Tenure (years) | 1, 2, 3 and 5 |
| Minimum Deposit Amount (INR) | 1000 |
| Interest | Interest is compounded quarterly but paid annually. |
| Other specifications regarding deposits | A deposit can be made only in multiples of INR 100 |
| Maximum limit | Nil |
| Premature withdrawal (INR) | Allowed after six months, subject to some terms and conditions |
| Nomination facility | Available |
Source: India Post
Here is a list of some other features of the post office fixed deposits :
1. Sovereign Guarantee: The Government of India acts as a guarantor to the plan. This results in a sovereign guarantee and protects the capital and interests of investors.
2. Constant returns: The fixed deposit provides stable returns to the investors at a pre-determined rate. It caters to investors who seek stability and security. For instance, suppose Mr. B has both FD and stocks in his portfolio. The return from stocks would be irregular due to market fluctuations. Whereas the FD would provide a constant return throughout.
3. Less technical hassle: The Post Office investment options can be availed easily, both online and offline. It is often less technically nuanced, which might be convenient for people who are not familiar with tech, like senior citizens.
4. Taxation: The post office fixed deposit scheme is eligible for tax deduction. According to the Income Tax Act 1961, investors can claim tax deductions on their post office fixed deposits under section 80C. The upper limit of this deduction is INR 1.5 lakh in each financial year.
The most important attribute of any investment avenue is its interest rate. The upcoming section deals with the post office interest rate in detail.
Post Office Fixed Deposit Interest Rates for 2025
The FD interest rates in the post office differ from banks to a great extent. The method of disbursing and categorising is also different. For instance, the post office 1-year FD interest rate is 6.9%. However, banks offer a range of interest rates on different time intervals within a year.
Let us take an example to understand this better:
For 180 days to 210 days, SBI offers 6.25% interest, but for 211 days to less than 1 year, interest goes up to 6.50%.
Current Rates
The latest post office interest rates offered on post office time deposits are listed below.
| Period (Year) | Rate (%) (p.a.) |
1 | 6.9 |
2 | 7.0 |
3 | 7.1 |
5 | 7.5 |
Comparison With Major Banks
The tables below compare post office FD rates with those offered by leading banks and NBFCs, including SBI, HSBC, and Bajaj Finserv. The rates listed are applicable to regular citizens who are below 60 years of age.
| Particulars | Post Office (p.a.) | SBI (p.a.) | HSBC (p.a.) | Bajaj Finserv (p.a.) |
| 1 | 6.9% | Up to 6.80% | Up to 7% | Up to 7.40% |
| 2 | 7.0% | 7% | 6% | Up to 7.80% |
| 3 | 7.1% | 6.75 | 6% | Up to 7.85% |
| 5 | 7.5% | 6.50 | 6% | Up to 7.85% |
Source: SBI, HSBC, Bajaj Finserv
Post Office FD Returns Based On Investment Amount
The post office FD rates might be some of the best FD rates in India 2025. The table below shows the yield that can be generated based on the post office fixed deposit interest rate.
| Investment Amount (INR) | 1 year @ 6.9% p.a. (INR) | 2 years @ 7.0% p.a. (INR) |
| 50,000 | 3,540 | 7,444 |
| 1,00,000 | 7,081 | 14,888 |
| 2,00,000 | 14,161 | 29,776 |
| 3,00,000 | 21,242 | 44,665 |
| 4,00,000 | 28,322 | 59,553 |
How To Invest In Post Office FD?
Investors can take the benefit of the post office fixed deposit interest rates if they invest in it optimally, following the due procedure.
This section gives a detailed analysis of the different requirements of making a post office time deposit investment.
1. Who Can Invest In Post Office Fixed Deposit?
Before initiating the fixed deposit investment process, investors must be eligible to avail a post office term deposit. Listed below are the different parameters that must be met to open a fixed deposit term deposit.
- An investor can open an account individually. Moreover, a joint account can be availed by up to three individuals.
- In the case of a minor or an individual of unsound mind, the FD must be availed by a guardian.
- A minor can open a term deposit in their name if they are older than ten years.
2. Required Documentations
Individuals can start a Post Office Fixed Deposit in a few simple steps. However, investors must have the following paperwork ready in order to start a fixed deposit account.
- KYC form is required for every investor. In case of a joint account, KYC of each individual must be submitted. In the case of minors, the guardian's KYC needs to be provided.
- Identity proofs like Aadhaar, PAN, driver's license, etc., are also required. In the case of minors, birth certificates must be submitted.
- Proper submission of the account opening form is also necessary.
3. Account Opening Methods
Investors can make fixed deposits either online or offline. The steps are listed in detail below.
Online Process
- Download the India Post Mobile Banking Application or visit their website.
- Enter the user credentials to log in, if you are an existing user. In case of new users you might have to sign up or contact your nearest post office branch.
- Visit OPEN POFD ACCOUNT. POFD stands for Post Office Fixed Deposit.
- Fill out the account opening form and submit the required documents.
- The deposit amount has to be submitted online.
Offline Process
- Investors can open a POFD offline by visiting the nearby post office branch.
- The officers and employees at the post office will offer a relevant application form and aid individuals through the process.
- Investors need to submit the form and the necessary information and the deposit amount.
Types Of Post Office Fixed Deposit Schemes
There are different types of time deposits offered by post offices. The two types of term deposits are detailed below. Each of these deposits offers a unique use case to its investors.
1. National Savings Time Deposit Account
The Government sets the deposit rates and other criteria for the deposit. The post office fixed deposit interest rate applicable under this regime is listed in the table below.
| Period (Year) | Rate (%) (p.a.) |
1 | 6.9 |
2 | 7.0 |
3 | 7.1 |
5 | 7.5 |
The deposit might be withdrawn prematurely, but there are certain conditions. For instance, if a deposit is withdrawn after six months but before one year, investors will earn the savings interest rate and not the fixed interest rate. No withdrawals can be made for six months.
2. National Savings Monthly Income Account
The National Savings Monthly Income Account (MIS) is a Post Office scheme allowing individuals to deposit a minimum of INR 1,000 (multiples of INR 1,000). A single account has a maximum of INR 9 lakh, while a joint account's maximum limit is INR 15 lakh.
Each joint holder has an equal share, and the limit for minors is separate. Interest is paid monthly, starting one month after account opening, and must be claimed as it does not earn further interest if left unclaimed2.
Excess deposits are refunded with only savings account interest. Premature closure is allowed after one year, with a 2% deduction from the principal if closed before three years and 1% if closed between three and five years. The account matures after five years, and in case of the depositor’s death, the nominee or legal heir receives the amount with interest up to the preceding month.
For instance, if Mr A invests in a post office monthly income scheme, he can withdraw the interest accrued every year and not wait for the FD to mature.
Tax Implications On Post Office FDs
The various post office fixed deposit schemes offer unique benefits to the investors. One such benefit is the tax benefit offered to the returns generated by the post office fixed deposits3.
According to the Income Tax Act 1961, investors can claim tax deductions on their post office fixed deposits under section 80C. The upper limit of this deduction is INR 1.5 lakh in each financial year.
Post Office FDs Vs. Other Investment Options
Apart from Post Office Fixed Deposits (POFDs), today’s investors can explore a variety of investment avenues tailored to different risk and return preferences. For instance, platforms like Grip offer opportunities to earn up to 14% annual returns through SEBI-regulated investment products that are rated by leading credit rating agencies such as CRISIL. These include instruments like Corporate Fixed Deposits, Corporate Bonds, Lease-Based Financing, and other alternative investment options — offering a mix of stability, predictable returns, and diversified exposure beyond traditional assets.
Some advantages of these securities are listed below.
1. Competitive interest rates: Returns on fixed deposits available at Grip Inest reach up to 10% per annum pre-tax. Bonds available on the platform offer returns ranging from 13-12%.
2. Rated: The securities are rated by credible agencies like CRISIL, IND, etc. Therefore, investors can gauge the degree of risk and credibility of each credit instrument.
3. Various instruments: Grip has curated a list of different instruments, like bonds, high-yield FDs, SDIs, etc. Each of these instruments has a set of unique features that serve the unique needs of each investor.
Conclusion
The post office offers different types of time deposit schemes, like the National Savings Time Deposit and National Savings Monthly Income Scheme. Other than the post office fixed deposits, there are various other securities, like bonds, offered by Grip Invest.
The investor's financial goals and requirements determine the investment choice. Investors should consider the interest rates, eligibility criteria, application process, etc., before investing. This shall ensure optimum investment and might provide capital appreciation.
FAQs On Post Office Fixed Deposit Interest Rates 2025
1. Can NRIs invest in Post Office Fixed Deposits?
No, non-resident Indians (NRIs) are not allowed to invest in any Post Office savings plans in India, including Post Office Fixed Deposits (FDs). An individual who has invested in a Post Office program before becoming an NRI is permitted to maintain such assets until they mature, but they are not permitted to make new investments or renew existing ones.
2. Is premature withdrawal allowed?
Yes, premature withdrawal is allowed on post office fixed deposits, subject to certain conditions. For instance, if a deposit is withdrawn after six months but before one year, investors will earn the savings interest rate and not the fixed interest rate. No withdrawals can be made for six months.
3. Can I take a loan against my Post office fixed deposit?
Yes, investors can borrow money against their Post Office Fixed Deposit (FD). Investors can fulfil immediate financial demands by taking out a loan against their FD without having to close their FD prematurely, resulting in a forfeiture of interest. Since the FD serves as collateral, this loan option is secured and has interest rates that are comparatively lower than those of unsecured loans.
References:
1. Ministry Of Communications, accessed from: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1994341#:~:text=India%20Post%20has%20the%20largest,up%20post%20office%20franchisee%20outlets
2. India Post, accessed from: https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx
3. India POst, accessed from: https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx
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