Post Office National Savings Recurring Deposit Account
The Post Office National Savings Recurring Deposit Account offers an interest rate of 6.70% per annum, compounded quarterly. The Government of India announces the interest rate quarterly, ensuring secure and predictable returns. The account has a fixed maturity of 5 years, after which the principal and interest are paid.
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Post Office National Savings Recurring Deposit Account
What is the Post Office National Savings Recurring Deposit Account?
A Post Office National Savings Recurring Deposit Account (RD account) is a government-backed savings scheme allowing investors to deposit a monthly fixed sum. Accounts can be opened by an adult individually or jointly by up to three adults, while a guardian may open an account for a minor. Premature closure is permitted only after three years, and the interest payable is 1% lower than the applicable Post Office RD rates.
Key Features of Post Office National Savings RD Account
Here are the important features and benefits of the Post Office National Savings Recurring Deposit (RD) Account:
Minimum and Maximum Deposit: The minimum monthly deposit is ₹100, and subsequent deposits must be in multiples of ₹10 with no upper limit.
Eligibility: Available to any Indian adult. A guardian can also open the Post Office Recurring Deposit account on behalf of a minor or someone of unsound mind.
Advance Deposit Facility: Depositors can make advance deposits for up to 5 years. Rebates are available on advance deposits:
₹10 rebate if 6 to 11 deposits are made in a calendar month.
₹40 rebate for every 12 deposits, plus ₹10 for any remaining balance of at least 6 deposits.
Loan Facility: After 12 monthly deposits, account holders can take a loan of up to 50% of the balance, repayable before maturity. The loan interest is 2% above the RD rate.
Eligibility for Post Office National Savings Recurring Deposit Account
The Post Office National Savings Recurring Deposit (RD) Account can be opened by different categories of depositors under the following conditions:
Resident Indian Citizen: The account holder must be a resident individual.
Single Account: Any adult can open and operate an RD account in their own name.
Joint Account: Up to three adults can jointly open an account.
Joint ‘A’ Type: To be operated jointly by all depositors or the surviving depositors.
Joint ‘B’ Type: To be operated separately by any depositor or the surviving depositors.
Guardianship Accounts:
A guardian can open an account on behalf of a minor.
A guardian can also open an account on behalf of a person of unsound mind (now termed as an “Authorised Account”).
Minor Account: A minor aged 10 years or above may open and operate an account independently.
Multiple Accounts: There is no restriction on the number of RD accounts a depositor may hold, individually or jointly.
Important Notes:
Upon reaching the age of 18 years, a minor’s account must be converted into an adult account by submitting a new Account Opening Form (AOF) and fresh KYC documents at the Post Office.
Accounts can also be opened through e-Banking or Mobile Banking, provided the depositor holds a linked Post Office Savings Account (mandatory for internet banking access).
How to Open a Post Office National Savings Recurring Deposit Account?
Opening a Post Office Recurring Deposit account is simple. Follow these steps to start your RD account:
Visit Your Nearest Post Office: Go to a nearby Post Office branch and request the Recurring Deposit (RD) account opening form.
Fill Out the Application Form: Enter your personal details, nominee information, and the chosen monthly deposit amount.
Submit Required Documents: Provide identity proof, address proof, and passport-size photographs for KYC verification.
Make Your First Deposit: Deposit a minimum of ₹100 (or multiples of ₹10 thereafter) to activate your RD account.
Receive Your Passbook: Once the account is activated, a passbook will be issued to track deposits and interest earned.
Manage Online (where CBS is enabled): If your branch is CBS-enabled, you can manage the RD account via India Post Mobile Banking or Internet Banking, check balances, view statements, deposit installments, and track maturity.
Who Should Invest in the Post Office National Savings RD Account?
The Post Office National Savings Recurring Deposit Account is suitable for various investors. Here’s who can benefit the most:
Salaried and conservative depositors: Suitable for salaried and conservative investors who prefer safety over high returns. This RD offers a disciplined monthly savings plan with guaranteed returns, helping them meet short-term and long-term financial goals.
Students and Young Professionals: Encourages students and young professionals to develop a regular savings habit, preparing them for future financial responsibilities and emergencies.
Retirees: Offers retirees a secure investment option with predictable income, allowing them to preserve capital while earning assured interest over a fixed tenure.
Parents and Guardians: Enables parents and guardians to open accounts for minors, helping secure funds for education or other important future financial needs.
Tax Benefits Under Post Office National Savings RD Account
The Post Office Recurring Deposit (RD) scheme does not provide direct tax benefits under Section 80C. The interest earned on the RD is fully taxable and must be declared under the head Income from Other Sources in your income tax return. Starting 1 April 2025, Tax Deducted at Source (TDS) will apply under Section 194A if the total annual interest from all Post Office deposits, including RD, exceeds ₹50,000 for non-senior citizens and ₹1,00,000 for senior citizens. While the RD does not qualify for deductions, depositors often combine it with tax-saving instruments such as the Public Provident Fund (PPF) or Equity Linked Savings Schemes (ELSS) to balance assured returns and tax efficiency.
Key Takeaways
The Post Office National Savings Recurring Deposit Account is a secure, government-backed savings option encouraging regular deposits. The minimum deposit is ₹100 per month, with additional multiples of ₹10 allowed and no upper limit. The account matures in 5 years, with quarterly compounding. Loan facility up to 50% of the balance is available after 1 year. Advance deposits for 6 or 12 months earn a rebate, and accounts can be continued for another 5 years after maturity. Premature closure is allowed after 3 years with 1% lower interest than applicable RD rates. Interest earned is taxable; to plan better, use the Post Office RD Calculator to estimate returns.
FAQs
What is the interest rate of RD in the Post Office?
The interest rate for a Post Office Recurring Deposit (RD) is set by the Government of India quarterly. Currently, it is around 6.70% per annum. It may vary slightly each quarter, and interest is compounded quarterly.
How much is ₹5,000 per month in RD for 5 years in the Post Office?
If you deposit ₹5,000 per month in a Post Office RD for 5 years at the prevailing interest rate of 6.70% per annum, compounded quarterly, the maturity amount will be approximately ₹3.55 - 3.60 lakh.
Can I open an RD account in the Post Office?
Any Indian resident adult can open a Post Office RD account individually or jointly (up to three adults). Minimum monthly deposit is ₹100, with no maximum limit.
Is Post Office RD better than FD?
Both are safe, government-backed options, but they serve slightly different purposes:
RD: Encourages disciplined monthly savings; ideal for regular savers.
FD: Requires a lump sum deposit; suitable for one-time investments.
Your choice depends on whether you want monthly savings (RD) or single deposit growth (FD).
Which RD is best for 1 year?
The Post Office RD has a fixed 5-year tenure and cannot be opened for one year; for a 1-year government-backed option, consider a 1-year Post Office Time Deposit and compare its interest rate with short-term bank RDs or FDs to decide which offers better returns.
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Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.
Past 10 Years' annualised returns as on 01-10-2025
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
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