A Post Office FD at the 5-year slab currently offers a compelling mix of safety and returns, where ₹3,00,000 can grow to about ₹4,14,126 before tax with quarterly compounding and annual interest credit. The scheme runs under the National Savings Time Deposit framework, backed by a sovereign guarantee, making it a preferred choice for conservative investors who value predictable outcomes and easy tenure options. Post Office FD: Invest ₹3 Lakh And Get ₹4,14,126 appears frequently in searches because savers want simple, transparent math and a clear picture of the rules around compounding, tax treatment, and premature withdrawal. The 5-year slab is the top rate in the Time Deposit tiers and remains a go-to for those targeting Section 80C deductions under the old regime. If stability, government backing, and a known maturity value are priorities, this is a practical, low-stress parking spot for surplus funds.
It is exactly what many savers aim to verify: the current 5-year rate, quarterly compounding, and the maturity math that brings ₹3 lakh close to ₹4.14 lakh before tax. India Post computes interest quarterly and credits it annually, which means the effective growth edge comes from compounding even when the payout hits your account once a year. With sovereign backing and a 5-year tenure that can qualify for Section 80C under the old regime, it fits neatly into conservative and tax-aware portfolios.
Post Office FD
| Item | Details |
|---|---|
| Scheme Name | National Savings Time Deposit (Post Office FD) |
| Tenure Considered | 5 Years |
| Current 5-Year Rate | 7.5% p.a. (Oct–Dec 2025) |
| Compounding | Quarterly; Interest Paid Annually |
| Example Principal | ₹3,00,000 |
| Approx. Maturity | ₹4,14,126 (Before Tax) |
| Total Interest | ~₹1,14,126 (Before Tax) |
| Minimum Deposit | ₹1,000; No Upper Cap For TD |
| Section 80C | 5-Year TD Eligible (Old Regime) |
| Safety | Sovereign Guarantee |
5-year Post Office FD is a straightforward, government-backed way to turn ₹3,00,000 into roughly ₹4,14,126 before tax through quarterly compounding with annual interest credit. It suits safety-first savers who value predictable outcomes, Section 80C eligibility on the 5-year option under the old regime, and simple account operations without market volatility. If your goals are capital protection, clean cash-flow planning, and assured maturity value, locking into the current 5-year slab is a practical, low-maintenance choice just remember to factor in slab-wise taxation on interest and match the tenure to your liquidity needs to avoid premature-withdrawal penalties.
Post Office FD Interest Rate and Tenure
Time Deposits offer four standard tenures 1, 2, 3, and 5 years with the 5-year slab generally carrying the highest rate in the lineup. Rates are reviewed quarterly, so it’s smart to check the current slab before booking; for Oct–Dec 2025, the 5-year slab stands at 7.5% p.a., making the long-tenure pick attractive for stable compounding.
How ₹3 Lakh Becomes ₹4,14,126
Post Office TDs are compounded quarterly but pay interest annually, which nudges the effective yield above simple annual calculations. The standard formula applies: A=P(1+rn)ntA=P(1+nr)nt, where P=₹3,00,000P=₹3,00,000, r=0.075r=0.075, n=4n=4, and t=5t=5, bringing the maturity to roughly ₹4,14,126 before tax. This treatment mirrors how India Post calculates Time Deposit growth across quarters.
Tax Rules That Matter
Only the 5-year Post Office FD qualifies for Section 80C deduction on principal under the old tax regime (subject to the overall cap). Interest is fully taxable as per your slab and typically gets taxed in the year it is credited, so always compare post-tax returns when evaluating alternatives.
Premature Withdrawal And Extensions
No premature closure is permitted within the first six months of opening the deposit. Between six months and one year, payouts are typically reduced to the savings-account rate; after one year, early closure can attract a penalty or reduced rate. On maturity, you may extend the TD for the same tenure at the applicable rate, which is a convenient way to keep compounding without fresh paperwork.
Who Should Consider It
This is ideal for investors who prioritize capital safety, transparent government-set rates, and a guaranteed maturity value. It also suits savers building a ladder for near- to medium-term goals, where each rung unlocks at a planned date with low volatility and easy predictability.
How To Open and Operate
You can open a Time Deposit individually, jointly, or in the name of a minor (above 10 years) with just ₹1,000, in multiples of ₹100 thereafter. Interest is credited annually to a linked Post Office savings account (or as configured), simplifying cash-flow planning for those who like seeing yearly income hit their account.
Practical Planning Tips
- Verify the quarter’s rate before investing; rates are reviewed every quarter.
- Use a calculator that assumes quarterly compounding and annual credit to mirror actual POTD math.
- If tax savings are a priority, pick the 5-year slab for Section 80C and compare post-tax yields with NSC and SCSS based on your slab and age.
Post Office FD: Invest ₹3 Lakh and Get ₹4,14,126 is achievable at the current 7.5% 5-year slab with quarterly compounding and annual payout, delivering roughly ₹1.14 lakh in gross interest. For safety-first, tax-aware savers who want predictable results without market swings, the 5-year Time Deposit remains a straightforward, sovereign-backed choice.
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FAQs on Post Office FD
Q1. Is the 5-year Post Office FD rate 7.5% right now?
Yes, for the Oct–Dec 2025 quarter, the 5-year slab is 7.5% p.a., subject to quarterly review by the government.
Q2. How does quarterly compounding work if interest is paid annually?
Compounding increases the principal four times a year for calculation purposes, but the interest credit hits your account annually, resulting in stronger growth than simple interest.
Q3. Does the 5-year Post Office FD offer Section 80C benefits?
Yes, the 5-year Time Deposit qualifies for Section 80C deduction on principal under the old regime, within the overall limit.
Q4. Can a 5-year Post Office FD be closed before maturity?
It’s restricted: no closure in the first six months; reduced payouts between six and twelve months; and rate reductions or penalties thereafter, so match the tenure to your liquidity needs.
Q5. Can I open multiple Post Office FDs and ladder the maturities?
Yes, You can open multiple Time Deposit accounts and choose different tenures (1, 2, 3, and 5 years) to create a ladder, which helps stagger maturities for better liquidity and rate capture over time.
