SBI vs Post Office FD Rates 2026: Which Pays More?

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For anyone who still trusts a fixed deposit more than the stock market, the choice usually comes down to two names: the State Bank of India and the Post Office. Both are backed by government ownership or guarantee, both are available in almost every town in India, and both are considered nearly risk-free. But their interest rates, rules, and tax treatment differ enough to matter, especially if you're planning to park a lakh or more for the next few years.

Here's how the two compare as of mid-2026.

SBI FD Rates: Tenure by Tenure

SBI's fixed deposit rates on domestic deposits below ₹3 crore, effective from December 15, 2025, look like this for the general public and senior citizens:

• 7 to 45 days: 3.05% / 3.55%
• 46 to 179 days: 4.90% / 5.40%
• 180 to 210 days: 5.65% / 6.15%
• 211 days to less than 1 year: 5.90% / 6.40%
• 1 year to less than 2 years: 6.25% / 6.75%
• 2 years to less than 3 years: 6.40% / 6.90%
• 3 years to less than 5 years: 6.30% / 6.80%
• 5 years to 10 years: 6.05% / 7.05% (senior citizen rate includes the extra WeCare premium)
• 444-day Amrit Vrishti special scheme: 6.45% / 6.95%

The 444-day Amrit Vrishti deposit currently offers SBI's highest advertised rate, while the 2-to-3-year bracket is the sweet spot among regular tenures.

Post Office Time Deposit Rates

Post Office Time Deposits, notified quarterly by the Ministry of Finance, are simpler: only four tenures exist, and the same rate applies to everyone, regardless of age. For the July–September 2026 quarter, the rates are:

• 1 year: 6.90%
• 2 years: 7.00%
• 3 years: 7.10%
• 5 years: 7.50%

Unlike SBI, the Post Office does not offer a separate, higher rate for senior citizens on its regular Time Deposit. Senior citizens looking for a better post-office return typically use the separate Senior Citizen Savings Scheme instead, which currently pays 8.2%.

₹1 Lakh Comparison: Where Does Your Money Grow Faster?

Using each institution's own compounding method (quarterly compounding, interest paid annually or on maturity), here is roughly what ₹1 lakh would grow to:

• 1-year SBI FD (general, 6.25%): about ₹1,06,400 — interest of roughly ₹6,400
• 1-year Post Office TD (6.90%): about ₹1,07,100 — interest of roughly ₹7,100
• 5-year SBI FD (general, 6.05%): about ₹1,35,000 — interest of roughly ₹35,000
• 5-year SBI FD (senior citizen WeCare, 7.05%): about ₹1,41,800 — interest of roughly ₹41,800
• 5-year Post Office TD (7.50%, same for all ages): about ₹1,45,000 — interest of roughly ₹45,000

These are approximate figures for illustration; actual maturity value can vary slightly by payout frequency. The pattern, though, is consistent across tenures: for a regular (non-senior) depositor, the Post Office Time Deposit edges out SBI at almost every matching tenure.

Safety: Both Are Government-Backed, But Not Identically

This is where the two products genuinely differ. Post Office Time Deposits carry a full sovereign guarantee from the Government of India — there's no upper limit on how much of your deposit is protected. SBI, being a bank, is covered by DICGC deposit insurance, which protects only up to ₹5 lakh per depositor per bank (principal plus interest combined). For deposits above that threshold, SBI's safety, while still very high given it's a public sector bank, isn't technically unlimited the way a Post Office TD is.

If you're depositing well beyond ₹5 lakh and safety is your top priority, the Post Office has a structural edge.

Tax Treatment

Interest from both SBI FDs and Post Office Time Deposits is fully taxable as per your income slab — neither offers a tax-free option. The difference lies in the tax-saving variant:

• SBI's 5-year Tax Saver FD qualifies for a Section 80C deduction of up to ₹1.5 lakh, with a mandatory 5-year lock-in and no premature withdrawal during that period.
• The Post Office's 5-year Time Deposit also qualifies for the same Section 80C benefit, but only the 5-year tenure — the 1, 2, and 3-year Post Office deposits do not.

TDS applies to both: SBI deducts 10% TDS if annual interest exceeds ₹40,000 (₹50,000 for senior citizens), while the Post Office follows similar TDS thresholds on Time Deposit interest.

Premature Withdrawal

SBI allows premature withdrawal on regular FDs, with a penalty of 0.50% on deposits up to ₹5 lakh and 1% on deposits above ₹5 lakh, calculated against the applicable rate for the period the deposit was actually held.

Post Office Time Deposits also permit premature withdrawal, but only after a minimum lock-in of 6 months, and the rules are stricter: withdrawals between 6 months and 1 year earn only the Post Office Savings Account rate, while withdrawals after 1 year attract a deduction of 2 percentage points from the applicable Time Deposit rate for that tenure.

Which Should Senior Citizens Choose?

This is the clearest differentiator. SBI rewards senior citizens directly on its FDs — an extra 0.50% across all tenures, plus an additional 0.50% under the WeCare scheme for 5-year-and-above deposits, taking the 5-year senior citizen rate to 7.05%. The Post Office Time Deposit doesn't offer any age-based premium at all.

So for senior citizens specifically, SBI's 5-year WeCare FD (7.05%) and the Post Office 5-year TD (7.50%) end up fairly close, with the Post Office still slightly ahead — but senior citizens who don't need immediate access to funds are usually better off in the Senior Citizen Savings Scheme at 8.2%, which beats both.

The Bottom Line

For a general (non-senior) depositor comparing plain fixed-tenure deposits, the Post Office Time Deposit currently offers marginally higher rates than SBI at almost every matching tenure, along with an unlimited sovereign guarantee. For senior citizens, SBI's additional rate premiums narrow that gap considerably, though the Post Office's Senior Citizen Savings Scheme remains a stronger option than either regular product. If liquidity and ease of premature withdrawal matter more to you than the last few basis points of return, SBI's slightly gentler withdrawal penalty structure and wider tenure flexibility (7 days to 10 years, versus the Post Office's four fixed tenures) may still make it the more practical choice.

Conclusion

Neither option is wrong — both are about as safe as fixed-income investing gets in India. The right pick depends on your amount, your age, and how soon you might need the money back. For most general depositors chasing the higher headline rate with full capital safety, the Post Office Time Deposit currently has a slight edge; for senior citizens who want flexibility alongside strong senior-citizen premiums, SBI remains a solid, well-rounded choice.

For More Information -

India Post - Post Office vs State Bank of India FD Comparison 2026 | Best Interest Rates

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