When planning for a secure and stable financial future, Fixed Deposits (FDs) often come to mind as one of the safest investment options. Among various FD schemes available in India, the Post Office Fixed Deposit Scheme (Post Office FD) stands out due to its government backing and attractive interest rates. In this article, we will break down exactly how much return you will get if you deposit amounts ranging from ₹1 lakh to ₹10 lakh in a Post Office FD for 5 years, making it easy to understand for both beginners and seasoned investors alike.
Depositing Rs 1 Lakh to Rs 10 Lakh in Post Office FD
| Feature | Details |
|---|---|
| Scheme Name | Post Office Fixed Deposit (FD) Scheme |
| Interest Rate (5-year tenure) | 7.5% per annum (as of January 1, 2025) |
| Interest Compounding Frequency | Quarterly compounding, annual payout |
| Minimum Deposit | ₹1,000 |
| Maximum Deposit | No maximum limit |
| Deposit Example | ₹1 lakh to ₹10 lakh |
| 5-Year Returns on ₹1 lakh Deposit | ₹1,44,995 (Total Interest Earned: ₹44,995) |
| Tax Benefits | Eligible under Section 80C of the Income Tax Act (5-year FD only) |
| Premature Withdrawal | Allowed after 6 months with reduced interest rate |
| Official Website | India Post – Post Office FD Scheme |
The Post Office Fixed Deposit Scheme is a solid choice for anyone looking for guaranteed returns, safety, and tax benefits. With a 7.5% interest rate for 5 years, it stands out in the current market scenario. Whether you want to invest ₹1 lakh or ₹10 lakh, the returns are predictable, making it an excellent tool for conservative investors. If stability and reliability are your priorities, opening a Post Office FD can be a wise financial move.
What is Post Office Fixed Deposit Scheme?
The Post Office FD Scheme, officially known as Post Office Time Deposit (POTD), is one of the oldest and most trusted fixed deposit options in India. Managed by the Department of Posts, Ministry of Communications, it is backed by the Government of India, ensuring high safety and stability of your investments.
Key Features:
- Flexible tenures: 1 year, 2 years, 3 years, and 5 years
- Attractive fixed interest rates, reviewed quarterly
- Guaranteed returns with no risk of loss
- Tax benefits on 5-year tenure deposits
- Easily accessible through over 1.5 lakh post offices across India
Current Interest Rates for Post Office FD (as of March 2025)
| Tenure | Interest Rate (Per Annum) |
|---|---|
| 1 Year | 6.9% |
| 2 Years | 7.0% |
| 3 Years | 7.1% |
| 5 Years | 7.5% |
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How Much Return Will You Get on ₹1 Lakh to ₹10 Lakh in Post Office FD for 5 Years?
Let’s break it down with clear examples. We used the standard compound interest formula for quarterly compounding:
Compound Interest Formula: M=P×(1+rn)n×tM = P \times \left(1 + \frac{r}{n}\right)^{n \times t}
Where:
- M = Maturity amount
- P = Principal amount (₹1,00,000 to ₹10,00,000)
- r = Annual interest rate (7.5% or 0.075)
- n = Number of compounding periods per year (4 for quarterly)
- t = Time in years (5 years)
| Principal Amount (₹) | Maturity Amount (₹) | Total Interest Earned (₹) |
|---|---|---|
| ₹1,00,000 | ₹1,44,995 | ₹44,995 |
| ₹2,00,000 | ₹2,89,989 | ₹89,989 |
| ₹3,00,000 | ₹4,34,984 | ₹1,34,984 |
| ₹4,00,000 | ₹5,79,978 | ₹1,79,978 |
| ₹5,00,000 | ₹7,24,973 | ₹2,24,973 |
| ₹6,00,000 | ₹8,69,967 | ₹2,69,967 |
| ₹7,00,000 | ₹10,14,962 | ₹3,14,962 |
| ₹8,00,000 | ₹11,59,956 | ₹3,59,956 |
| ₹9,00,000 | ₹13,04,951 | ₹4,04,951 |
| ₹10,00,000 | ₹14,49,945 | ₹4,49,945 |
Why Choose Post Office FD Over Bank FDs?
1. Safety & Sovereign Guarantee:
Post Office FDs are 100% secured as they are backed by the Government of India, unlike some bank FDs which only offer deposit insurance up to ₹5 lakh.
2. Attractive Interest Rates:
For a 5-year tenure, Post Office FDs offer 7.5%, often higher than many public and private sector banks.
3. Tax Benefits:
Investments in 5-year Post Office FDs are eligible for deductions under Section 80C of the Income Tax Act, up to ₹1.5 lakh.
4. No Market Risk:
Unlike mutual funds or stock market investments, Post Office FDs offer fixed returns without any risk.
How to Open a Post Office Account?
Here’s a step-by-step guide:
Step 1: Visit Your Nearest Post Office
Carry:
- Aadhaar Card
- PAN Card
- Passport-size photos
- Address proof
Step 2: Fill Out the FD Application Form
Mention tenure, deposit amount, and nominee details.
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Step 3: Deposit Your Money
Deposit via cash, cheque, or transfer.
Step 4: Receive Your FD Receipt
This will include maturity details and interest rate.
Alternatively, if you already have a Post Office Savings Account, you can also open a Post Office FD online through the official India Post Banking Portal.
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Post Office FD Scheme FAQs
Q1. Is Post Office FD safe?
Yes. It is completely safe as it is backed by the Government of India, unlike banks where only ₹5 lakh is insured.
Q2. Can I withdraw my Post Office FD before maturity?
Yes, after 6 months. However, you will get a reduced interest rate.
Q3. Is the interest earned taxable?
Yes. Interest earned is fully taxable as per your income tax slab.
Q4. Can I take a loan against Post Office FD?
No, currently the Post Office does not offer loans against FDs.
Q5. Can NRIs invest in Post Office FD?
No, Non-Resident Indians (NRIs) are not eligible to open Post Office FDs.
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