For people looking for a government-backed investment option, the Post Office Time Deposit (TD) scheme can be considered for fixed-tenure savings. The scheme offers different interest rates depending on the investment period.
For the July–September 2026 quarter, the interest rate on a 3-year Post Office TD is 7.1%, while the 5-year TD offers 7.5%. Based on the current rates, a ₹10 lakh investment can generate significant interest over the selected tenure.
₹10 Lakh Investment in 3-Year Post Office TD
The Post Office 3-year Time Deposit currently carries an annual interest rate of 7.1%. If you invest ₹10 lakh, the estimated annual interest would be around ₹71,000.
At the same rate, the total interest over three years would be approximately ₹2.13 lakh. This would be earned in addition to the original ₹10 lakh deposit.
However, this calculation assumes that the 7.1% interest rate remains unchanged throughout the entire three-year period.
₹10 Lakh Investment in 5-Year TD
The 5-year Post Office Time Deposit currently offers an interest rate of 7.5%. On an investment of ₹10 lakh, this works out to approximately ₹75,000 in interest per year.
Over five years, the estimated total interest would be ₹3.75 lakh if the rate remains unchanged. Compared with the estimated ₹2.13 lakh interest from the 3-year option, the 5-year deposit could generate around ₹1.62 lakh more in interest.
The higher interest, however, comes with a longer five-year investment period.
How Post Office TD Interest Is Paid
Interest on a Post Office Time Deposit is calculated quarterly, while the interest payout is made annually. If the annual interest is not withdrawn, the unpaid amount does not earn additional interest.
The 5-year Post Office TD also provides a tax deduction benefit under Section 80C of the Income Tax Act, subject to the applicable rules. However, the interest earned from the deposit is taxable according to the investor’s applicable tax regime.
3-Year vs 5-Year Post Office TD
The choice between the two tenures depends on when you may need the money. If you expect to require the funds after three years, the 3-year TD offers a shorter commitment.
If you are comfortable keeping the investment for five years, the current 7.5% rate means the 5-year TD can provide higher total interest.
Small savings scheme interest rates are reviewed every quarter. Therefore, investors should check the prevailing rate and applicable tax rules before making a fresh investment.
Disclaimer: The interest and return figures mentioned above are estimates based on the applicable rates for the July–September 2026 quarter and the assumption that the rates remain unchanged throughout the respective tenure. Actual returns may vary depending on prevailing rules, interest rates and taxation. Investors should verify the latest Post Office interest rates and tax provisions before investing.