Post Office RD Scheme – The Post Office Recurring Deposit (RD) Scheme is gaining popularity as a safe and disciplined savings option, especially for those seeking guaranteed returns with minimal risk. With just a modest monthly deposit, investors can accumulate a significant amount over a fixed tenure. Currently offering an attractive interest rate, this government-backed scheme has become a preferred choice for salaried individuals, senior citizens, and small investors. In this article, we will break down the features, benefits, eligibility criteria, maturity amount calculations, and other key details of the Post Office RD Scheme. If you’re planning a stable financial future, here’s everything you need to know.
What is the Post Office RD Scheme?
The Post Office Recurring Deposit (RD) Scheme is a small savings initiative offered by India Post under the Government of India. It enables individuals to invest a fixed amount every month over a tenure of 5 years and earn interest that is compounded quarterly. The scheme is specifically designed for those who prefer secure and risk-free returns while cultivating a habit of disciplined savings. With a low entry point of just ₹100 per month and no upper limit, it is accessible to people from all income groups. Since it is government-backed, the returns are assured, making it a trusted financial tool for salaried employees, homemakers, senior citizens, and first-time investors alike.
Key Features:
- Investment tenure: 5 years (60 months)
- Minimum deposit: ₹100 per month
- No upper limit on deposit (in multiples of ₹10)
- Government-backed with guaranteed returns
- Interest compounded quarterly
Current Interest Rate and Returns
The current interest rate for the Post Office RD Scheme stands at 6.7% per annum, compounded quarterly. This rate is fixed by the Government of India and reviewed every quarter. With consistent monthly deposits, investors can earn substantial returns over a 5-year period, making it an attractive option for those seeking safe and predictable growth. As of Q1 FY 2025-26, the Post Office RD Scheme offers a 6.7% interest rate (compounded quarterly). This rate is reviewed quarterly by the Ministry of Finance.
Approximate Returns Table (Monthly Deposit vs Maturity Amount)
| Monthly Deposit | Interest Rate | Total Deposit (5 Years) | Maturity Amount | Total Interest Earned |
|---|---|---|---|---|
| ₹500 | 6.7% | ₹30,000 | ₹35,969 | ₹5,969 |
| ₹1,000 | 6.7% | ₹60,000 | ₹71,938 | ₹11,938 |
| ₹2,000 | 6.7% | ₹1,20,000 | ₹1,43,876 | ₹23,876 |
| ₹3,000 | 6.7% | ₹1,80,000 | ₹2,15,814 | ₹35,814 |
| ₹5,000 | 6.7% | ₹3,00,000 | ₹3,59,690 | ₹59,690 |
| ₹7,000 | 6.7% | ₹4,20,000 | ₹5,03,566 | ₹83,566 |
| ₹9,000 | 6.7% | ₹5,40,000 | ₹6,47,442 | ₹1,07,442 |
| ₹10,000 | 6.7% | ₹6,00,000 | ₹7,19,380 | ₹1,19,380 |
Note: The maturity amount is an approximation and may slightly vary based on compounding and rounding by the post office system.
How to Open a Post Office RD Account?
Opening an RD account is simple and can be done both online and offline through any India Post branch.
Offline Process:
- Visit your nearest post office
- Submit duly filled Form-A for RD
- Provide KYC documents (Aadhaar, PAN, etc.)
- Deposit the first installment in cash or cheque
Online Process:
- Register on India Post Internet Banking
- Link your savings account
- Open RD via the “Recurring Deposit” option
Who Should Invest in This Scheme?
The Post Office RD is suitable for a wide range of investors:
- Salaried individuals looking for a disciplined savings option
- Parents planning future expenses like education or marriage
- Senior citizens wanting stable, assured returns
- First-time investors seeking a safe start
- Small business owners with limited monthly surplus
Benefits of Investing in Post Office RD
- Guaranteed Returns: Backed by the Government of India
- Flexible Investment: Start with just ₹100/month
- Loan Facility: Up to 50% loan available after 12 installments
- Nomination Facility: Can nominate a family member
- Account Transfer: Transferable across India Post branches
Tax Implications of Post Office RD
- Interest earned is taxable under ‘Income from Other Sources’
- TDS is applicable if interest exceeds ₹40,000 in a financial year (₹50,000 for senior citizens)
- No tax benefit under Section 80C for RD deposits
Post Office RD vs Bank RD: A Quick Comparison
| Feature | Post Office RD | Bank RD |
|---|---|---|
| Interest Rate | 6.7% (as of Q1 FY25-26) | Varies by bank (5%-7.5%) |
| Government Guarantee | Full | Partial (up to ₹5 lakh DICGC) |
| Accessibility | All India Post branches | Limited to bank network |
| Flexibility | High | Depends on bank policy |
| Online Access | Yes | Yes (with net banking) |
The Post Office RD Scheme offers a safe, low-risk, and disciplined path to building a sizable corpus. With the power of compounding and fixed monthly contributions, investors can accumulate over ₹6.4 lakh in 5 years with consistent saving. It’s an ideal choice for anyone looking for assured returns without worrying about market volatility. If you’re planning long-term financial goals and want a stress-free investment journey, the Post Office RD Scheme is worth considering.
Frequently Asked Questions (FAQs)
Q1. What is the minimum and maximum amount I can deposit in Post Office RD?
The minimum monthly deposit is ₹100, and there is no maximum limit. Deposits must be in multiples of ₹10.
Q2. Can I prematurely withdraw from the Post Office RD scheme?
Yes, premature closure is allowed after 3 years, but interest will be paid at the savings account rate, not the RD rate.
Q3. Is there a penalty for missing an RD installment?
Yes, a default penalty of ₹1 for every ₹100 is charged per month. After 4 defaults, the account can be discontinued.
Q4. Can I take a loan against my Post Office RD?
Yes, after 12 consecutive deposits, you can avail up to 50% of the balance as a loan.
Q5. Is the interest from Post Office RD tax-free?
No, interest earned is taxable as per your income slab. TDS is applicable if interest exceeds the annual threshold.