Post Office Time Deposit – 1 Year
Lock your money for 1 year and earn a guaranteed return — better than most bank FDs.
Rate effective: July–September 2026 (Q2 FY 2026-27) · Last verified: July 2026 · Source: India Post
Reviewed by Tushar Paturde, CFP® — AMFI-registered Mutual Fund Distributor (ARN-129322)
What is Post Office Time Deposit – 1 Year?
A Post Office Time Deposit (TD) is exactly like a Fixed Deposit at a bank, except it is issued by India Post with a sovereign government guarantee. You deposit a lump sum for a fixed period, and at the end you receive your principal plus interest.
The 1-year TD is useful when you need a safe place to park funds for a short period — for example, waiting for a good investment opportunity or building an emergency corpus.
Who Should Invest?
- Anyone who wants a safe short-term option for 1 year
- People building a short-term emergency fund in a high-safety instrument
- Retirees parking proceeds from matured investments temporarily
Key Features
- Interest compounded quarterly but paid at maturity
- TDS applies if interest exceeds ₹40,000 per year (₹50,000 for senior citizens)
- Can be pledged as collateral for loans
- Premature withdrawal allowed after 6 months (at lower rate)
- Auto-renewal possible on maturity
Eligibility — Who Can Open POTD 1Y?
- Any resident Indian individual can open a TD account, singly or jointly with up to 3 adults
- A guardian can open an account on behalf of a minor or a person of unsound mind
- A minor above 10 years of age can open a TD account in their own name
- NRIs cannot open a new Post Office Time Deposit
How to Invest in POTD 1Y
- Visit any post office with a filled Time Deposit account opening form
- Submit KYC documents — PAN card and address proof
- Deposit the amount by cash, cheque, or transfer from an existing Post Office Savings Account
- Collect your passbook — this is your proof of deposit until maturity
- You can also open a TD online via India Post's internet banking if you already hold a Post Office Savings Account with that facility enabled
Premature Withdrawal and Loan Against POTD 1Y
A 1-year Post Office Time Deposit cannot be withdrawn before 6 months from the date of deposit, except on the death of the depositor. If you withdraw between 6 months and the full 1-year maturity, you only earn interest at the Post Office Savings Account rate (currently 4% p.a.) for the period actually held — you forfeit the higher TD rate entirely, so breaking it early is expensive.
The TD can be pledged as collateral for a loan from a bank or NBFC, since it's a transferable, government-backed instrument — post offices themselves don't offer a direct loan facility against it.
Taxation and ITR Reporting
The 1-year TD gets no Section 80C deduction. Interest is fully taxable under "Income from Other Sources" at your income-tax slab rate, and India Post deducts TDS at 10% if your total interest across all your Post Office time deposits exceeds ₹40,000 in a year (₹50,000 for senior citizens), provided your PAN is on record — submit Form 15G/15H if your total income is below the taxable threshold to avoid TDS.
Watch Out For
- No Section 80C tax benefit (unlike the 5-year TD)
- Premature withdrawal penalty applies before 6 months
POTD 1Y Example
₹1,00,000 invested in a 1-year TD at the current 6.9% p.a. (compounded quarterly) grows to roughly ₹1,07,100 at maturity — the full interest is taxable, so factor your slab rate into the actual take-home return.
How POTD 1Y Compares
A side-by-side look at POTD 1Y against PPF, NSC, and the 5-year Post Office Time Deposit — all figures are the currently published, verified rates.
| Scheme | Rate (% p.a.) | Compounding | Tenure | Min Investment | Max Investment | 80C | TDS |
|---|---|---|---|---|---|---|---|
| POTD 1Y | 6.9% | Quarterly | 1 year | ₹1,000 | No limit | – | Yes |
| PPF | 7.1% | Annual | 15 years | ₹500/year | ₹1.5 lakhs/year | ✓ | – |
| NSC | 7.7% | Annual | 5 years | ₹1,000 | No limit | ✓ | – |
| POTD 5Y | 7.5% | Quarterly | 5 years | ₹1,000 | No limit | ✓ | Yes |
Compare All NSS Schemes
See how POTD 1Y compares to all other National Savings Schemes in one table.
← View All NSS Interest RatesAll NSS Schemes
Frequently Asked Questions
What is the current 1-year Post Office TD interest rate?
The 1-year Post Office Time Deposit currently earns 6.9% p.a., compounded quarterly and paid at maturity.
Can I withdraw a 1-year TD before maturity?
Only after 6 months, and even then you earn just the Post Office Savings Account rate (4% p.a.) for the period held, not the TD rate. Withdrawal before 6 months is not permitted except on the depositor's death.
Does the 1-year TD have a tax deduction under Section 80C?
No. Only the 5-year Post Office Time Deposit qualifies for Section 80C. The 1, 2, and 3-year TDs don't.
Is TDS deducted on Post Office TD interest?
Yes, if your total interest across all Post Office time deposits exceeds ₹40,000 in a year (₹50,000 for senior citizens) and your PAN is on record. Submit Form 15G/15H to avoid it if your income is below the taxable threshold.
Can I pledge a Post Office TD for a loan?
Yes, banks and NBFCs accept Post Office Time Deposits as loan collateral, though the post office itself doesn't lend against it directly.
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