Post office savings schemes: interest rates, rules and tax

What are post office savings schemes?

Post office savings schemes are the Government of India's small savings schemes, run by the Ministry of Finance and opened at a post office. A small savings scheme is a savings product the government itself offers to households. The Ministry announces the interest rate every quarter, which means every three months.

The National Savings Institute lists nine schemes that take new money:

• Post Office Savings Account
• Recurring deposit (RD), five years
• Time deposit (TD), one, two, three or five years
• Monthly Income Scheme (MIS), five years
• Senior Citizens' Savings Scheme (SCSS), five years
• National Savings Certificate (NSC), five years
• Kisan Vikas Patra (KVP), which runs for a period that depends on the rate
• Public Provident Fund (PPF), 15 years
• Sukanya Samriddhi Account, 21 years

Who stands behind them? The money goes into a government account, the National Small Savings Fund, and withdrawals are paid out of it. The Ministry of Finance describes the schemes as offering "complete security of investment". DICGC deposit insurance, the insurance that covers bank deposits, does not apply to these schemes, because they are not bank deposits.

Post offices offer all nine. Some banks also offer PPF, Sukanya Samriddhi and other schemes. Ask your bank which ones it handles. You need your Aadhaar and PAN to open any of them. Accounts for children are covered in post office schemes for a boy child.

Which post office schemes can you open, and what do they pay?

Nine schemes take new money, each with its own term (the length of time you commit), minimum and way of paying interest. Rates are per year. Maturity is the date the scheme ends and your money comes back.

Rates are for 1 October to 31 December 2026, from the Ministry of Finance's Office Memorandum of 30 September 2026.

Put the single-holder maximum of ₹9 lakh into the Monthly Income Scheme in October to December 2026 and it pays 7.4% a year. That is ₹5,550 a month, or ₹66,600 a year, taxed at your slab rate. A slab rate is the tax rate for the income band your total income falls in.

A few details by scheme:

• Time deposit. Interest is compounded quarterly (interest earns interest) and paid out yearly.
• KVP. The deposit doubles at maturity, which takes 115 months (9 years 7 months) for October to December 2026.
• Sukanya Samriddhi. A guardian opens it for a girl under ten. Try the Sukanya Samriddhi calculator.
• PPF. See the PPF calculator and how to open a PPF account.
• RD. Try the recurring deposit calculator or read what a recurring deposit is.

NSC and KVP covers buying, early closure and tax for those two.

The Mahila Samman Savings Certificate appears in some rate tables, but it closed. It took its last deposits on 31 March 2025, and certificates already bought run their two-year term at 7.5%.

Who sets post office interest rates, and how often?

The Ministry of Finance announces post office rates every quarter, in an Office Memorandum. The latest, dated 30 September 2026, kept every rate unchanged for October to December 2026.

When the government moved to quarterly rates in 2016, it said they would follow government bond yields of similar maturity. Its recent notices state the rates without giving a formula. Rates were last changed from 1 January 2024, when the 3-year time deposit rose from 7.0% to 7.1% and Sukanya Samriddhi from 8.0% to 8.2%. That makes 12 quarters in a row at the same rates.

Whether the rate you get can change depends on the scheme:

• Locked on opening day. A time deposit, MIS, SCSS, NSC or KVP keeps the rate in force the day you open it.
• Moves each quarter. PPF, Sukanya Samriddhi and the savings account earn whatever rate is notified for the quarter.

Check the quarter before you invest.

How are post office schemes taxed?

Under the old tax regime, the 5-year time deposit, the Senior Citizens' Savings Scheme, NSC, PPF and Sukanya Samriddhi deposits count towards section 123 (the old Section 80C). Section 123 allows a deduction of up to ₹1,50,000 a year across all its eligible items together. The old regime is the earlier set of slabs that keeps deductions. The default regime is the newer one, and it has no section 123 deduction.

The detail by scheme:

• 5-year time deposit and SCSS. Both count under the old regime. Close either within five years and the amount you take out is added to your income for that year.
• NSC. Deposits count towards the ₹1,50,000 limit, but only under the old regime. The interest is added to the certificate each year and is taxable.
• Sukanya Samriddhi and PPF. Deposits count under the old regime, and what the account pays out is not taxed.
• KVP, RD, MIS and the savings account. None of these gives a section 123 deduction.

Interest on NSC, KVP, RD, time deposits, MIS and the Senior Citizens' Savings Scheme is taxed at your slab rate. The recurring deposit is not tax-free. PPF and Sukanya Samriddhi payouts are exempt.

TDS means tax deducted at source, before the interest reaches you. A post office may deduct TDS on interest above ₹50,000 a year (₹1 lakh for senior citizens).

Our guide to section 123 and the other deduction sections lists every eligible item. Features of the new tax regime explains how the two regimes differ. For the Senior Citizens' Savings Scheme and other senior tax rules, see tax saving for senior citizens.

Can you open a post office scheme online?

Yes, if you already have a post office savings account. India Post's internet banking lets you open and close a recurring deposit or time deposit online. Its pages for the TD, RD, MIS, NSC, KVP and PPF say accounts can also be opened through e-Banking, which needs a post office savings account first. Online, you can also deposit into your savings account, RD, PPF and Sukanya Samriddhi account. PPF and Sukanya Samriddhi deposits can also go in by NEFT or RTGS, or through the India Post Payments Bank app.

Without a savings account you start at a post office. For large investments the post office can ask where the money came from. Since 6 January 2025, India Post has accepted Aadhaar e-KYC (a biometric check) for single adult savings accounts. From 23 April 2025 that extended to single adult MIS, TD, KVP and NSC accounts.

NSC and KVP buying is explained in NSC and KVP.

Can NRIs invest in post office schemes?

No. NRIs cannot open new post office accounts or buy NSC or KVP. The General Rules allow only an adult resident citizen of India to open an account.

If you open one as a resident and later become an NRI, you can keep it until maturity. It cannot be extended, no interest is paid after maturity, and the money is paid on a non-repatriable basis. A PPF account can also be closed early, after five years, when you become an NRI. An NRI may be a nominee, and is paid on the same non-repatriation basis.

For NRI routes elsewhere, read how NRIs can invest in mutual funds. NRIs can invest in mutual funds through Koshex.

Can you close a post office scheme before it matures?

Most can be closed early after a minimum period, at a lower rate or with a deduction. Premature closure means closing before the maturity date. The rules differ by scheme:

• Time deposit. Nothing can be withdrawn in the first six months. Close in the first year and you get the savings-account rate. A 2- or 3-year deposit closed after one year earns 2 percentage points less than the 1- or 2-year rate. The 5-year deposit cannot be closed in its first four years, and after that it earns the savings-account rate.
• RD. You can close it after three years, at the savings-account rate (4% for October to December 2026) for the whole period.
• MIS. No withdrawal in the first year. Close it in the first three years and 2% of your deposit is cut; after three years, 1%.
• PPF. Closure is allowed only after five years, and only for life-threatening illness, higher education or a change of residency.
• NSC. You can't cash it early except on death, a lender enforcing a pledge, or a court order.
• KVP. Early encashment has its own rules, set out in NSC and KVP.

A matured account that is not closed keeps earning only the savings-account rate until you close it.

Post office scheme, bank FD or debt fund: how do they compare?

They differ in who stands behind the money, how the return is set and how it is taxed.

Post office schemes. The Ministry of Finance runs them and the money goes into a government account. The rate is set each quarter and, for time deposits, MIS, SCSS, NSC and KVP, locked when you open.

Bank fixed deposits. DICGC insures bank deposits up to ₹5,00,000 per depositor per bank, principal and interest together. The rate is fixed for the term. An individual's deposit up to ₹1 crore can be broken early at a lower rate for the period, minus any penalty the bank has disclosed. Interest is taxed at your slab rate.

Debt funds. A debt fund lends your money to governments, banks and companies by buying their bonds. It has no fixed interest rate, because the bonds' interest shows up in the fund's NAV, the price of one unit. The RBI says government securities carry practically no risk of default. Their prices still move with interest rates, so the value of a gilt fund, a debt fund that holds government securities, can fall when rates rise. Most debt funds hold more than 65% in debt and money market instruments. Gains on such funds' units bought on or after 1 April 2023 are taxed at slab rates, whatever the holding period. There is no TDS on a resident's redemption gains.

Koshex, an app run by an AMFI-registered mutual fund distributor, offers mutual funds as regular plans, and fixed deposits, including tax-saving fixed deposits. DICGC cover applies to bank deposits only, not to company or NBFC deposits. Read debt funds against fixed deposits, how risk and return trade off, the gilt fund and money market fund pages, or the wider map of investment options in India.