Post Office TD · India · verified October 2026

Post Office FD Break Calculator — Time Deposit Premature Closure

Post Office Time Deposits follow four rules, not a single 2% penalty. A TD cannot be closed at all in the first 6 months. Closed between 6 and 12 months, it earns the Post Office Savings Account rate of 4.00% — not the TD rate minus 2%. Closed after 12 months, it earns the TD rate applicable to the period actually completed, minus 2.00%. A 5-year TD closed after 3 years therefore earns the 3-year rate less 2.00%. National Savings Certificates are a separate scheme with no ordinary encashment at all. There is also no penalty on the principal; the loss comes entirely from lower interest. On ₹2,00,000 in a 5-year TD at 7.50% closed after three completed years, the payable rate is 5.10% and interest is about ₹30,600 instead of roughly ₹48,000 at maturity.

Under 6 months: Not permitted
6 to 12 months: 4.00% savings rate
After 12 months: TD rate − 2.00%
Compounding: Annual
Minimum deposit: ₹1,000
NSC early encashment: Not available

Post Office TD deposit details

Post Office TD card rates by tenure

These are the rates used to reprice your deposit when it is closed early. Your holding period is mapped to the highest bucket it does not exceed.

Post Office TD card interest rates by tenure bucket
Tenure bucket	General rate
1 year	6.90%
2 years	7.00%
3 years	7.10%
4 years	7.50%
5 years	7.50%

Worked examples

Each row is calculated with the same rule the calculator uses: card rate for the period held, minus the penalty, simple interest for the days held.

Worked premature withdrawal examples for Post Office TD
Scenario	Rate applied	Penalty	Interest paid	Interest at maturity	Loss
₹2,00,000 · 5-year TD at 7.50% · closed after 3 years	7.10%	2.00%	₹30,600	₹89,990	₹59,390
₹5,00,000 · 5-year TD at 7.50% · closed after 8 months	4.00%	0.00%	₹13,315	₹2,24,974	₹2,11,659
₹1,00,000 · 3-year TD at 7.10% · closed after 18 months	6.90%	2.00%	₹7,357	₹23,508	₹16,151

Four rules, not one flat 2% penalty

Most calculators — including several large aggregators — apply a flat 2% deduction to every Post Office early closure. That is wrong for two of the four cases, and materially wrong for the 6-to-12-month window.

Between 6 and 12 months the deposit is treated as a savings account: you get 4.00%, with no further deduction. On a 5-year TD at 7.50% that is a far bigger loss than 5.50%, and it is the single most common surprise for depositors closing in the first year.

The 6-to-12-month window is the worst place to close

Closing at month 11 pays 4.00%. Waiting one more month moves you onto the TD rate for the completed period minus 2.00% — which for a 5-year TD at 7.50% is 5.50%, or 1.50 percentage points more, plus the extra month of accrual.

Unless the money is urgently needed, waiting past the 12-month mark is usually worth more than any other decision available to you. The calculator lets you shift the closure date to see the difference.

NSC, KVP and MIS are not time deposits

Only the Post Office Time Deposit (1, 2, 3 or 5 years) is a fixed-term deposit. National Savings Certificates have no ordinary early encashment — only against pledge or on the death of the holder. Kisan Vikas Patra and Monthly Income Scheme have their own closure rules.

If you are looking for early closure of an NSC, the answer is generally that it is not possible. Do not rely on a TD-style 2% calculation.

Where to close, and what to carry

Premature closure is handled at the post office where the account was opened, not at any branch. Carry the passbook, a withdrawn-and-closed account form, and photo ID. For amounts above the branch limit, the sanction may take a few working days.

Interest is paid by cheque or credited to your post office savings account. Ask for the calculation sheet — it shows the rate applied and the deduction, which is useful if the figure differs from what this calculator estimated.

How to close a Post Office TD FD early

Confirm which scheme you hold: TD (1/2/3/5 year) is closable early, NSC is not.
Check how many complete months and years have run. Under 6 months, wait — closure is not permitted.
Visit the originating post office with your passbook, photo ID and the withdrawal/closure form.
The counter applies the applicable rule — 4.00% between 6 and 12 months, or the completed-period TD rate minus 2.00% after a year.
Ask for the calculation sheet and check the rate against the table on this page before signing.

Frequently asked questions

There is no flat penalty. Under 6 months closure is not allowed. Between 6 and 12 months you receive the 4.00% savings account rate. After 12 months you receive the TD rate applicable to the completed period, minus 2.00%.

No. The Post Office Time Deposit scheme does not permit premature closure within the first six months. The only exceptions relate to the death of the holder or a court order.

It pays the TD rate for the period actually completed, less 2.00%. A 5-year TD closed after four completed years is settled on the four-year rate minus 2.00%, not on the 5-year rate.

No, not in the ordinary sense. National Savings Certificates can be encashed only against a pledge to a bank or government department, or on the death of the holder. There is no 2%-deduction option.

Yes, interest is taxable at your slab rate and is reported under Income from Other Sources. TDS applies above ₹50,000 of interest in a financial year, or ₹1,00,000 for senior citizens, under Section 194A.

Usually not. The 6-month no-closure rule and the 4.00% treatment between 6 and 12 months make it a poor instrument if you might need the money inside a year. Bank FDs are more forgiving, even after the penalty.

Sources

Penalty percentages and card-rate buckets re-checked October 2026. Banks revise rates without notice; confirm at the branch or on the bank's site before acting.

Related calculators and guides

All bank FD break calculators

Bank penalty rules last verified 27 October 2026. Always confirm the current terms with your bank before closing a deposit.