Post Office Time Deposit (TD) 2026: Tenures, Tax Benefit, Premature Withdrawal Rules
The Post Office Time Deposit is the simplest product India Post offers: a fixed deposit with a government guarantee. It is often compared to a bank FD, but the differences that matter — the 80C treatment, the premature closure rules and how interest is paid — sit in the details.
The four tenures
| Tenure | Section 80C deduction | Interest taxable? |
|---|---|---|
| 1 year | No | Yes |
| 2 years | No | Yes |
| 3 years | No | Yes |
| 5 years | Yes | Yes |
Each tenure carries its own rate, and the rates are not simply increasing with tenure — that relationship changes as rates are revised.
⚠️ Check the current figure: Time Deposit rates are revised every quarter by the Government of India. Check the rate for your tenure on the India Post savings schemes page or the National Savings Institute before committing funds — a rate quoted anywhere else may be from a previous quarter.
How interest works
- Calculated quarterly, paid annually. You do not receive quarterly payouts.
- Credited to your savings account. This is why a Post Office Savings Account is normally opened alongside a TD.
- Fully taxable. Even the 5-year TD, which gets an 80C deduction on the amount invested, produces taxable interest — see our guide to TDS and Form 15G/15H.
Premature closure — what it costs
- First six months: closure is not permitted at all.
- Six to twelve months: you receive the Post Office Savings Account rate, not the Time Deposit rate — a significant reduction.
- After twelve months: a reduced rate applies for the completed period.
The practical lesson is to match the tenure to when you actually need the money. Splitting a large sum across two shorter deposits is usually better than closing one long deposit early.
How to open a Time Deposit
- Visit any post office offering savings services — use our nearest post office guide if you are not sure which one serves you.
- Carry KYC documents: proof of identity, proof of address, PAN and passport-size photographs.
- Complete the account opening form and nominate someone — see our guide to nomination.
- Deposit by cash or cheque. With a cheque, the account opens on the date the cheque clears, not the date you hand it over — this affects your maturity date.
- Collect the passbook and check that the tenure, amount and maturity date are correct before you leave the counter.
Time Deposit or bank FD?
Both are fixed deposits; the difference is who stands behind them and how they are taxed. A post office TD carries a sovereign guarantee with no deposit-insurance ceiling in the way bank deposits are insured up to a limit per depositor per bank. A bank FD usually wins on convenience — online opening, instant closure, sweep facilities. We compare the two in detail in Post Office FD vs Bank FD.