Post Office Time Deposit: Invest ₹10 Lakh for 5 Years and Earn Rs 1.62 Lakh Interest

For people looking for a government-backed savings option, the Post Office Time Deposit (TD) can be considered for fixed-tenure investing. The scheme offers different interest rates depending on whether the deposit is held for one, two, three or five years. For the July to September 2026 quarter, the interest rate is 7.1% for three-year TDs and 7.5% for five-year TDs.

Suppose you invest ₹10 lakh. The interest you can earn will depend on the tenure chosen. Here is a simple look at the estimated interest from a three-year and five-year Post Office TD at the prevailing rates.

₹10 lakh in a 3-year Post Office TD

The interest rate for a three-year Post Office Time Deposit is currently 7.1% per annum for the July to September 2026 quarter.

At this rate, ₹10 lakh would generate around ₹71,000 in interest for a year. Over three years, the estimated interest would be around ₹2.13 lakh, taking the total to approximately ₹12.13 lakh.

This is an illustrative calculation based on the current rate remaining applicable throughout the three-year period. The rate applicable when the account is opened is generally applicable until maturity under the scheme rules.

₹10 lakh in a 5-year Post Office TD

The five-year Post Office Time Deposit currently carries an interest rate of 7.5% per annum.

If ₹10 lakh is deposited at this rate, the annual interest works out to about ₹75,000. Over five years, the estimated interest would be approximately ₹3.75 lakh.

This would take the total amount of principal plus estimated interest to around ₹13.75 lakh, assuming the applicable rate remains unchanged for the calculation.

Compared with the three-year option, the five-year deposit could generate about ₹1.62 lakh more in interest over the full tenure. However, the money remains invested for two additional years.

How is Post Office TD interest calculated?

The interest on a Post Office Time Deposit is calculated on a quarterly basis and is payable annually. The scheme rules also state that no additional interest is paid on interest that has become due but has not been withdrawn.

This means investors should not assume that an unpaid annual interest amount will automatically generate further interest. The annual interest can also be credited to the account holder's savings account as permitted under the scheme rules.

Is there a tax benefit on a 5-year TD?

The five-year Post Office Time Deposit qualifies for a deduction under Section 80C, subject to the applicable income tax rules. However, investors should also consider the tax treatment of the interest earned and their applicable tax regime before investing.

Tax rules can change, so investors should check the latest provisions before making a decision.

3 years or 5 years: What should you consider?

The choice largely depends on how long you can keep the money invested.

A three-year TD may suit someone who has a financial requirement around the three-year mark and does not want to lock the money away for longer. A five-year TD provides a higher interest rate currently and a longer period for earning interest, but it also requires a longer commitment.

Post Office small savings interest rates are reviewed periodically by the government. Therefore, investors should check the applicable rate, withdrawal rules and tax provisions before opening a new account.


Disclaimer: This article is for information purposes only. Interest calculations are illustrative and based on the rates mentioned for the July to September 2026 quarter. Rates, tax rules and scheme conditions may change. NewsPoint does not provide investment advice or guarantee returns. Investors should verify the latest rules and consult a qualified financial adviser before making investment decisions.