Department of Posts Issues Clarification on 2% Interest Deduction for Premature TD Closure

Premature Closure of 5-Year Time Deposit Accounts: Department of Posts Clarifies Applicability of 2% Interest Deduction for Accounts Opened Before 09.11.2023

No. FS-10/27/2024-FS-DOP

भारत सरकार / Government of India

संचार मंत्रालय / Ministry of Communications

डाक विभाग / Department of Posts

(वित्तीय सेवा प्रभाग) / (Financial Services Division)

डाक भवन, संसद मार्ग, नई दिल्ली / Dak Bhawan, Sansad Marg, New Delhi

Dated: 24.07.2026

To

The Chief Postmaster General

Andhra Pradesh Circle,

Vijayawada-520013.

Subject: Clarification regarding the premature closure of 5-year Time Deposit (TD) accounts after completion of four years – Applicability of 2% deduction in respect of accounts opened between 12.12.2019 and 09.11.2023.

Sir/Madam,

Kindly refer to Andhra Pradesh Circle letter no. APCO/FS/Misc-II/24-25 dated 20.11.2024 on the subject cited above.

The matter was taken up with the Department of Economic Affairs (DEA), Ministry of Finance (MoF) for clarification and vide OM No. 1/17/2024-NS dated 16.07.2026 (copy enclosed), the DEA, MoF has clarified that the amendments notified vide G.S.R. 830(E) dated 07.11.2023 circulated vide SB Order 22/2023, which came into force on 09.11.2023, shall be applicable only to Time Deposit accounts opened on or after 09.11.2023.

Accordingly, Time Deposit accounts opened prior to 09.11.2023 shall continue to be governed by the provisions of the National Savings Time Deposit Scheme, 2019, as applicable before the said amendment.

Therefore, in respect of 5-year Time Deposit accounts opened between 12.12.2019 and 09.11.2023 and prematurely closed after the completion of four years, the interest payable shall be calculated at the rate admissible for the corresponding 3-year Time Deposit less two percentage points, in terms of Rule 8(c) of the National Savings Time Deposit Scheme, 2019, as applicable prior to the amendment.

This issues with the approval of the Competent Authority.

Yours faithfully

(Prasenjit Chatarji)

Assistant Director (SB-I)

Copy to:

All Head of Circles for information and necessary action in similar cases.