Post Office: This scheme can earn you ₹10,00,000 just by investing ₹5,00,000 in interest. You just have to do this work

Post Office Time Deposit is not only a safe investment, but with the right strategy, it is also a powerful wealth creator. If you can stay invested for a long period and allow the magic of compounding to work, then this simple scheme can also give you extraordinary results.

When it comes to investments with safe and guaranteed returns, crores of Indians trust the schemes of banks and post offices the most. Here, your money is 100% safe, and the return is also fixed in advance. One such superhit scheme of the Post Office is Time Deposit, which we also call Post Office FD (Fixed Deposit) in common language.

If you are also such an investor who does not want to take market risk, but also wants to see your money grow rapidly, then this scheme of the post office can be helpful for you. You can also earn more interest than the principal through this scheme. Meaning if you invest 5 lakhs, then you can earn 10 lakh rupees in interest. You just have to adopt a special method for this. Know about this.

What is Post Office Time Deposit (POTD)?

It works exactly like a bank FD. You deposit a lump sum amount for a fixed period, and you get a fixed interest rate on it. In the post office, you can open a time deposit account for 1 year, 2 years, 3 years, and 5 years. The interest rate is different for each period.

Current interest rates (July-September 2025 quarter)

1 year TD: 6.9%
2-year TD: 7.0%
3-year TD: 7.1%
5-year TD: 7.5%

Apart from this, by investing in a 5-year TD of the post office, you also get a tax exemption of up to Rs 1.5 lakh under section 80C of the Income Tax Act.

How will the money be more than doubled? Know the power of 'extension'

Most people withdraw money when their FD matures. But the post office also gives you the option to extend your time deposit after maturity. And when you do this, the real power of compounding starts showing its magic. To earn double the interest from the original, you have to extend it twice.

Let's understand this with a calculation:

• Suppose, you have made a 5-year TD of ₹5,00,000 in the post office.
• Maths for the first 5 years
• Investment amount: ₹5,00,000
• Interest rate: 7.5% (annual compounding)
• Interest you will get after 5 years: ₹2,24,974
• Total amount on maturity: ₹5,00,000 + ₹2,24,974 = ₹7,24,974

Everything is fine till here. Now most people will withdraw this ₹7.25 lakh. But you don't have to do this. You have to extend this FD for the next 5 years.

Magic of the next 5 years (Total math for 10 years)

Now your new principal will be: ₹7,24,974 (old principal + interest)

For the next 5 years, this entire amount will earn interest at the rate of 7.5% (assuming the interest rate remains the same).

After 10 years, your total interest will be: ₹5,51,175

After 10 years, total amount on maturity: ₹5,00,000 + ₹5,51,175 = ₹10,51,175

Should I get an extension again?

You are not allowed to withdraw money in the 10th year as well. You will have to extend it once again, meaning you will have to continue it for 15 years.

Now look at the math for 15 years

Now your new principal will be: ₹10,51,175 (old principal + interest)

For the next 5 years, you will get interest at the rate of 7.5% on this entire amount (assuming that the interest rate remains the same).

After 15 years, your total interest will be: ₹10,24,149

Thus, the total amount on maturity after 15 years: ₹5,00,000 + ₹10,24,149 = ₹15,24,149

It means you invested 5 lakh rupees, but earned 10,24,149 rupees on it only from interest. In this way, you have created a fund of 15,24,149 rupees from 5 lakh.

What are the rules of account extension?

There are some simple rules to follow to extend the account:

You can request for an extension at the time of opening the account or you can extend it even after maturity.

Time limit

1-year TD can be extended within 6 months of maturity.

2-year TD can be extended within 12 months of maturity.

3 and 5-year TD can be extended within 18 months of maturity.

Interest rate: When you extend the account, the same interest rate is applicable on it which is prevailing on the TD of that period on the day of maturity.

Frequently Asked Questions (FAQs)

1. Is interest paid annually on Post Office TD?

Answer: Yes, in Post Office Time Deposit, interest is calculated quarterly but it is paid on annual basis. However, if you wish, you can receive this interest every year in your post office savings account, but then you will not get the full benefit of compounding mentioned above.

2. Can I extend my 5-year TD for only 2 or 3 years?

Answer: No, you can extend your 5-year TD only for 5 years. The extension is for the same period for which the TD is done.

3. Does the 80C tax benefit apply on the extended period as well?

Answer: No. The section 80C tax benefit is available only on fresh investments. The extended amount is not considered a new investment, so it does not get tax exemption again.

4. What if I forget to apply for an extension?

Answer: If you do not apply for an extension within the given time limit, your account is automatically closed and on maturity amount you get only simple interest equal to post office savings account (currently 4%).

5. Which is better between post office TD and bank FD?

Answer: Both are safe. Post office TD interest rates are often slightly better than some government banks and it has sovereign guarantee of the government. On the other hand, private banks can sometimes offer more attractive rates and better online facilities. You should take a decision by comparing your convenience and interest rates.