Sovereign FD
Post Office Time Deposit (POTD)
Verified Indian financial mathematics, statutory regulations, and step-by-step actionable breakdowns.
Expected Yield6.9% - 7.5% p.a.
Lock-In Tenure1 - 5 Years
Risk LevelZero Risk
Tax StatusTaxable as Slab
Overview & Statutory Background
The Post Office Time Deposit works like a bank FD but is a Government of India savings scheme. Interest is compounded quarterly and paid annually. The 5-year deposit qualifies for Section 80C (Old Tax Regime).
Key Features & Operational Guidelines
Choose 1, 2, 3 or 5-year tenure
Minimum ₹1,000 with no maximum
Interest rate is fixed for the tenure
Account can be transferred across post offices
Who is Eligible to Invest?
- •Resident adults, minors through guardians, and joint accounts of up to three adults
Indian Taxation Breakdown
| Stage | Tax Treatment |
|---|---|
| Initial Investment | Only the 5-year deposit qualifies for Section 80C. |
| Interest & Returns | Interest is taxable; TDS may apply above notified thresholds. |
| Maturity / Withdrawal | Principal is returned with no further tax. |
Advantages & Limitations
Key Advantages (Pros)
- ✓Sovereign backing
- ✓Often higher rate than comparable bank FDs
- ✓Simple and easy to open
Important Limitations (Cons)
- ✕Interest is fully taxable
- ✕Premature closure has penalties after six months
- ✕Limited online features compared to banks
Post Office Time Deposit (POTD) FAQs
Post office schemes carry a sovereign guarantee, whereas bank FDs are insured by DICGC only up to ₹5 Lakh per depositor per bank.
Calculate Compound Returns
Use our interactive calculators to simulate exact growth schedules for this asset.