The Post Office Fixed Deposit Scheme, also known as the Post Office Time Deposit (POTD), is a secure and government-backed savings instrument managed by India Post. It’s a popular choice among conservative investors who prioritize capital safety and guaranteed returns.
If you’re planning to deposit ₹1000 in the scheme for 5 years, let’s understand how much it will grow into, based on the current interest rates in 2025.
🏦 Key Features of Post Office Fixed Deposit (POFD)
| Feature | Details |
|---|---|
| Lock-in Tenure | 1, 2, 3, or 5 years |
| Minimum Deposit | ₹1000 (no maximum limit) |
| Interest Payout | Annually (compounded quarterly) |
| Tax Benefit (5-year FD) | Under Section 80C |
| Safety | Backed by Government of India |
💰 Current Interest Rate (as of Q2 2025)
The interest rates are revised quarterly by the Ministry of Finance. As of April to June 2025, the 5-year Post Office FD interest rate is 7.5% per annum (compounded quarterly).
🔢 Calculation: ₹1000 in 5-Year Post Office FD
Let’s calculate how much ₹1000 grows in 5 years at 7.5% annual interest compounded quarterly.
📘 Formula:
A = P × (1 + r/n)^(n × t)
Where:
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A = Final Amount
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P = Principal (₹1000)
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r = Annual interest rate (7.5% or 0.075)
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n = Number of times compounded per year (quarterly = 4)
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t = Time in years (5)
🧮 Substituting Values:
A = ₹1000 × (1 + 0.075/4)^(4×5)
A = ₹1000 × (1 + 0.01875)^20
A = ₹1000 × (1.01875)^20
A ≈ ₹1000 × 1.4563
A ≈ ₹1456.30
✅ So, You Will Receive: ₹1456.30
If you deposit ₹1000 in a 5-year Post Office FD, you will receive ₹1456.30 at maturity — a gain of ₹456.30.
📊 Comparison Table
| Tenure | Interest Rate (2025) | Maturity Amount (for ₹1000) |
|---|---|---|
| 1 Year | 6.9% | ₹1069.00 |
| 2 Years | 7.0% | ₹1149.00 |
| 3 Years | 7.1% | ₹1230.00 |
| 5 Years | 7.5% | ₹1456.30 |
📌 Important Points to Know
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You can open the account at any India Post Office.
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You can invest in multiple FDs of different tenures.
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Joint accounts are allowed.
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Premature withdrawal is allowed after 6 months (with reduced interest).
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The 5-year FD offers Section 80C income tax exemption (up to ₹1.5 lakh).
🧠 Is It Worth Investing in ₹1000 for 5 Years?
While the maturity amount may not seem large, the Post Office FD is best suited for:
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Risk-averse investors
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Senior citizens
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Rural investors without access to banks
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Long-term safe parking of surplus funds
For larger deposits, the interest compounding will yield significantly more. For example:
| Amount Invested | Maturity Amount (5 years at 7.5%) |
|---|---|
| ₹10,000 | ₹14,563 |
| ₹50,000 | ₹72,815 |
| ₹1,00,000 | ₹1,45,630 |
🔚 Final Words
If you’re seeking safe, predictable returns, the Post Office 5-Year Fixed Deposit is a reliable option. While ₹1000 grows to ₹1456.30, larger investments can give you both wealth preservation and tax benefits.
Would you like help comparing this to other fixed income options like SBI FD, PPF, or Senior Citizen Savings Scheme?
