Investing in a Post Office Fixed Deposit (FD) is one of the safest and most reliable ways to grow your savings over time. The Post Office FD scheme offers guaranteed returns with competitive interest rates, making it a preferred choice for risk-averse investors.
But how much will your ₹1,00,000 investment grow in 1, 2, 3, and 5 years? This article provides a detailed breakdown of potential returns based on current interest rates and calculations.
Post Office Fixed Deposit
| Feature | Details |
|---|---|
| Interest Rates (2025) | 1 year: 6.90%, 2 years: 7.00%, 3 years: 7.10%, 5 years: 7.50% |
| Investment Amount | ₹1,00,000 |
| Returns (Approx.) | ₹1,07,120 (1 year), ₹1,14,974 (2 years), ₹1,23,517 (3 years), ₹1,44,427 (5 years) |
| Compounding Frequency | Quarterly |
| Premature Withdrawal | Allowed with penalties |
| Official Website | India Post |
A Post Office Fixed Deposit is a safe and reliable investment option, offering stable returns with government security. With interest rates up to 7.50%, it’s an excellent choice for conservative investors.
What is a Post Office Fixed Deposit?
A Post Office FD, also known as a Time Deposit, is a government-backed investment scheme that offers guaranteed returns. It is similar to bank FDs but is operated by the India Post and comes with flexible tenure options ranging from 1 to 5 years.
Why Choose a Post Office FD?
- Guaranteed Returns: Since it’s backed by the government, your money is safe.
- Competitive Interest Rates: Higher than most savings accounts.
- Quarterly Compounding: Increases overall returns.
- Tax Benefits: The 5-year FD qualifies for tax deduction under Section 80C.
see also: SBI Amrit Kalash FD 8.6% Interest Rate
How Much Will ₹1 Lakh Grow in 1, 2, 3, and 5 Years?
Post Office FDs offer compound interest quarterly. The formula used to calculate the maturity amount is:
M=P×(1+r4)4nM = P \times \left(1 + \frac{r}{4}\right)^{4n}
Where:
- M = Maturity Amount
- P = Principal (₹1,00,000)
- r = Annual interest rate (decimal form)
- n = Tenure in years
Returns Breakdown
1-Year FD @ 6.90%
- Interest Rate: 6.90% p.a.
- Maturity Amount: ₹1,07,120
- Total Interest Earned: ₹7,120
2-Year FD @ 7.00%
- Interest Rate: 7.00% p.a.
- Maturity Amount: ₹1,14,974
- Total Interest Earned: ₹14,974
3-Year FD @ 7.10%
- Interest Rate: 7.10% p.a.
- Maturity Amount: ₹1,23,517
- Total Interest Earned: ₹23,517
5-Year FD @ 7.50%
- Interest Rate: 7.50% p.a.
- Maturity Amount: ₹1,44,427
- Total Interest Earned: ₹44,427
How to Open a Post Office FD?
Opening a Post Office FD is simple. Follow these steps:
Step 1: Choose the Tenure
Decide how long you want to invest—1, 2, 3, or 5 years.
Step 2: Visit the Nearest Post Office
Carry KYC documents, Aadhaar, and PAN card.
Step 3: Fill the FD Application Form
Provide personal details, nominee information, and investment amount.
Step 4: Deposit Money
You can pay via cash, cheque, or online transfer.
Step 5: Get the FD Receipt
Keep the Fixed Deposit Certificate safe as proof of investment.
Premature Withdrawal Rules
- Allowed after 6 months with penalty.
- Lower interest rate applicable on early withdrawals.
Tax Benefits and TDS Applicability
- 5-year FD qualifies for tax deduction under Section 80C.
- Interest earned is taxable as per your income slab.
- No TDS deduction, but interest must be reported in ITR.
see also: Is There Tax on Interest on Fixed Deposits?
Post Office Fixed Deposit FAQs
1. Can I renew my Post Office FD after maturity?
Yes, you can renew or withdraw your FD upon maturity.
2. Is Post Office FD better than bank FD?
Post Office FDs usually offer higher interest rates than bank FDs and are backed by the government, making them safer.
3. Can I take a loan against my Post Office FD?
No, loans are not available against Post Office FDs.
4. How is the interest credited?
Interest is compounded quarterly and paid annually.
5. What happens if I don’t withdraw after maturity?
The FD continues to earn interest at the savings account rate until withdrawn.
