Post Office FD Scheme : Looking for a secure investment option that offers consistent monthly income with zero risk? The Post Office Fixed Deposit (FD) Scheme could be your ideal choice. With attractive interest rates, sovereign-backed safety, and the flexibility to start with a minimum amount, this government-backed scheme is gaining popularity among retirees, salaried individuals, and conservative investors alike.
If you’re planning to invest ₹2 lakh and want to understand how much monthly interest you can earn, this comprehensive guide will walk you through every detail of the Post Office FD scheme.
What is the Post Office Fixed Deposit (FD) Scheme?
The Post Office Fixed Deposit, also known as Post Office Time Deposit (POTD), is a savings scheme offered by India Post under the National Savings Scheme. It offers fixed returns on your investment for tenures ranging from 1 year to 5 years.
The interest is revised quarterly by the Ministry of Finance, and the investment comes with complete capital protection and guaranteed returns.
Key Features of Post Office FD Scheme:
- Backed by the Government of India, ensuring high safety
- Interest rates are fixed at the time of deposit and do not fluctuate
- Tenure options: 1, 2, 3, and 5 years
- Premature withdrawal facility after 6 months
- Option to transfer between post offices
- Available to individual Indian residents and guardians on behalf of minors
How Much Monthly Interest Can You Earn on ₹2 Lakh?
Interest on Post Office FDs is calculated annually but can be withdrawn monthly via the Monthly Income Scheme (MIS) or reinvested. Here’s a detailed breakdown of how much you can earn monthly with a ₹2 lakh deposit across different tenures and interest rates.
Monthly Interest Payout on ₹2 Lakh Investment
| Tenure | Interest Rate (Apr-Jun 2025) | Annual Interest | Monthly Interest |
|---|---|---|---|
| 1 Year | 6.9% | ₹13,800 | ₹1,150 |
| 2 Years | 7.0% | ₹14,000 | ₹1,166 |
| 3 Years | 7.1% | ₹14,200 | ₹1,183 |
| 5 Years | 7.5% | ₹15,000 | ₹1,250 |
Note: Monthly payout is approximate, calculated as Annual Interest divided by 12.
Benefits of Investing in Post Office FD Scheme
The Post Office FD Scheme isn’t just about safe returns—it offers a suite of benefits that make it a top pick for risk-averse investors.
- Risk-Free Returns: Your investment is guaranteed by the Government of India.
- Attractive Interest Rates: Often higher than traditional bank FDs.
- Tax Benefit: The 5-year deposit qualifies for deduction under Section 80C.
- Simple Process: Easy to open and manage at any post office branch.
- Premature Withdrawal: Allowed after 6 months, with some interest penalties.
- Nomination Facility: Add a nominee at the time of account opening.
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Comparison: Post Office FD vs Bank FD vs MIS
Before you invest, it’s wise to compare similar investment instruments.
| Feature | Post Office FD | Bank FD (Avg) | Post Office MIS |
| Safety | Very High | Moderate-High | Very High |
| Interest Rate | 6.9% – 7.5% | 5.5% – 7.25% | 7.4% |
| Tenure Options | 1, 2, 3, 5 years | Flexible | 5 years |
| Tax Deduction (80C) | Yes (5-year only) | Yes (5-year only) | No |
| Monthly Payout Option | Indirect | Available | Yes |
| Premature Withdrawal | After 6 months | Depends on bank | After 1 year |
Who Should Invest in Post Office FD?
This scheme is ideal for:
- Retirees: Looking for guaranteed monthly income
- Conservative Investors: Want capital safety with moderate returns
- Tax Savers: Interested in availing tax benefits under 80C
- Rural Investors: Without access to reliable private banking services
If you’re someone who values certainty and predictability in financial planning, Post Office FDs offer an excellent low-risk avenue to grow your wealth gradually.
How to Open a Post Office FD Account
Opening a fixed deposit account at the post office is a simple process:
Steps to Open an FD:
- Visit your nearest post office with KYC documents (Aadhaar, PAN, passport-size photo)
- Fill out the Post Office Time Deposit Account application form
- Choose the tenure and deposit amount
- Submit the form along with the initial deposit (cash/cheque)
- Receive the passbook or certificate indicating your investment details
Alternatively, you can open a Post Office FD online through the India Post website if you already have a savings account.
Tax Implications on Post Office FD Interest
- The interest earned is taxable under “Income from Other Sources”
- No TDS is deducted by the post office, but you are required to declare the income
- The 5-year tenure qualifies for tax deduction under Section 80C, up to ₹1.5 lakh per annum
- Form 15G/15H can be submitted to avoid TDS if total income is below the taxable limit
Latest Post Office FD Interest Rates (April to June 2025)
Here’s a look at the currently applicable interest rates for the different tenures:
| FD Tenure | Interest Rate |
| 1 Year | 6.9% |
| 2 Years | 7.0% |
| 3 Years | 7.1% |
| 5 Years | 7.5% |
These rates are reviewed quarterly by the government and can be subject to change based on economic factors.
If you’re looking for an investment that combines safety, predictability, and decent returns, the Post Office FD Scheme is definitely worth considering. With the ability to start small and still earn meaningful monthly interest, it provides a steady income stream without the market risks.
For those with a low-risk appetite and long-term saving goals, a ₹2 lakh deposit in this scheme can be a smart move. However, remember that the interest earned is taxable, and you should evaluate it within the context of your total income.
