Post Office TD: ₹5 lakh can grow to ₹7.25 lakh in 5 years; check 1, 2, 3 & 5-year returns

A Post Office Time Deposit (POTD), also known as a National Savings Time Deposit, is a government-backed investment option for investors seeking stable returns at relatively low risk.

The interest rate varies according to the tenure and is reviewed by the government every quarter. Here’s how a Rs 5 lakh investment could grow across 1-year, 2-year, 3-year and 5-year Post Office TDs.

1-year Post Office TD: The 1-year Post Office Time Deposit offers an interest rate of 6.9% per annum. If you invest Rs 5 lakh, you will earn approximately Rs 35,403 as interest, taking the total maturity amount to around Rs 5,35,403.

2-year Post Office TD: The 2-year Post Office Time Deposit offers an interest rate of 7% per annum. A Rs 5 lakh investment will earn approximately Rs 74,441 as interest over two years, taking the total maturity amount to around Rs 5,74,441.

The 3-year Post Office TD offers an interest rate of 7.1% per annum. If you invest Rs 5 lakh, you will earn approximately Rs 1,17,538 as interest over three years. Approximate maturity amount: Rs 6,17,538

The 5-year Post Office TD offers an interest rate of 7.5% per annum. A Rs 5 lakh investment will earn approximately Rs 2,24,974 as interest over five years. Approximate maturity amount: Rs 7,24,974

The table compares the interest rate, estimated interest earned and maturity amount on a Rs 5 lakh investment across 1-year, 2-year, 3-year and 5-year Post Office TDs.

A Post Office Time Deposit can be opened with a minimum investment of Rs 1,000, in multiples of Rs 100. There is no maximum limit on the amount that can be invested. Interest is compounded quarterly and paid annually. The annual interest can be credited to the customer's Post Office Savings Account or bank account if the required standing instruction/ECS mandate is provided in writing.

Not all Post Office Time Deposits qualify for an income tax deduction. Only investment in a 5- year Post Office TD qualifies for the Section 80C tax benefit under the old tax regime.

A Post Office TD cannot be withdrawn before completing six months from the date of deposit. For 1-, 2-, and 3-year TDs, premature closure after six months is subject to specific interest-rate rules. If a 2- or 3-year TD is closed after one year, interest is calculated at a rate 2% lower than the applicable rate for 1-year or 2-year TDs.

A 5-year TD cannot be closed before completing four years. If it is closed after four years, interest is paid at the Post Office Savings Account rate.