The Post Office RD 1000 per month 5 years scheme is a government-backed savings scheme that provides predictable returns over a fixed tenure. Currently, the interest rate is 6.70% p.a., compounded quarterly. These rates are set by the Ministry of Finance and are reviewed every quarter.
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What is the Post Office RD 1000 Per Month 5 Years Scheme?
The Post Office RD 1000 per month 5 years offers stable returns without exposure to market fluctuations over the 5 years. It encourages safe investment habits supporting your child’s education, marriage, and unexpected household or medical costs. Under the Post Office scheme, you can deposit ₹1000 per month for 60 months, earning compound interest (quarterly) at a fixed rate. It is appropriate for salaried customers, conservative investors, and homemakers.
Key Features of the Post Office RD 1000 Per Month 5 Years
The table below clarifies the essential features of the Post Office RD 1000 per month 5 years scheme:
Features
Description
Default Fee
₹1 per ₹100 for each month of default. If four consecutive instalments are missed, the account becomes discontinued. It can be revived within two months from the month of the fifth default by clearing arrears along with the default fees.
Advanced Deposit (Rebate)
A 6-month advance deposit earns a rebate of ₹10 per ₹100 denomination. A 12-month advance deposit earns ₹40 per ₹100 denomination. Beyond 12 months, an additional ₹10 rebate is given for every 6-month block. Rebates are applied proportionately for other denominations and instalment amounts.
Loan Facility
RD accounts can be pledged or assigned under the Government Savings Promotion General Rules (GSPR). RD loan facility is available via DoP e-Banking; limits and rates are per India Post guidelines. Please check the app/branch
Minimum Deposit
₹100 per month, in multiples of ₹10. There is no maximum limit.
Premature Closure
If closed after 3 years, the balance earns interest at the prevailing Post Office Savings Account (POSA) rate (currently 4%) instead of the RD rate.
Nomination
Nomination is not mandatory, but recommended
Transferability
Accounts can be transferred from one Core Banking Solution (CBS) Post Office to any other CBS Post Office across India.
Deposit Amount and Maturity Calculation
If you deposit ₹1,000 per month in the Post Office Recurring Deposit scheme, your savings can grow into a sizable corpus. For instance, at the current 6.70% annual interest rate compounded quarterly, a total deposit of ₹60,000 over 5 years will give a maturity value of about ₹71,366 (rounded to the nearest rupee).
The maturity is calculated using the standard RD formula:
M = R × [(1 + i)^n – 1] ÷ [1 – (1 + i)^(-1/3)]
Here,
R is the monthly deposit (₹1,000),
i is the quarterly interest rate, which is the annual rate divided by 4 and then by 100 (for 6.70%, i = 0.01675), and
n is the total number of quarters in the tenure (for 5 years, 60 months ÷ 3 = 20 quarters).
This means the deposit of ₹60,000 earns an interest of about ₹11,366, leading to the final maturity amount rounded to the nearest rupee.
To understand the effect of higher deposits, consider a few scenarios.
A monthly deposit of ₹2,000 for 5 years grows to about ₹1,42,732, while ₹3,000 per month for 5 years results in a maturity value of about ₹2,14,098.
These examples show how compounding boosts returns over time. The India Post RD Calculator or NSI-provided tables can be used for precise planning. They reflect official interest rates and give authoritative payout values, helping you see how deposit amount or tenure changes affect the maturity.
Who Can Open the Post Office RD 1000 Per Month 5 Years?
The Post Office RD 1000 per month 5 years scheme supports various account holders regardless of the type of long-term financial goal. Here are the basic eligibility requirements:
Category
Eligibility criteria
Single adult
Any resident of India aged 18 or above can open this account in their own name.
Guardians for Minors
A parent/legal guardian can open an RD account for a minor (aged below 10 years).
Minors (10+ years)
A minor aged 10 years or above can open an account and independently operate the account.
Multiple Accounts
Investors may hold more than one RD account, independently or jointly.
Guardians for Special Needs
A guardian can open and operate an account on behalf of persons declared of unsound mind under the law.
Joint Accounts
Up to three adults can jointly hold a single RD account. Joint Account Types:
Joint A: Operated jointly by all or surviving depositors
Joint B: Operated by any one or surviving depositor
Note:
-If a minor account holder’s age turns 18 years, they need to submit an account opening form along with the updated KYC documents so that their account gets converted into an adult account.
-According to Post Office Savings Bank (POSB) rules, eligibility is limited to resident individuals and guardians.
-Non-Resident Indians (NRIs) cannot open new RD accounts, but an existing account may continue if the depositor acquires NRI status after opening, subject to applicable conditions.
Step-by-Step Process to Open a Post Office RD 1000 Per Month 5 Years
Below are the steps to open a Post Office RD 1000 per month 5 years:
Step 1: Visit a Nearby Post Office
Go to any Indian Post Office branch where savings and RD services are supported. Check the India Post website to locate your nearest branch.
Step 2: Fill out the Account Opening Form
Get the account opening form from the counter and fill it with the required details.
Step 3: Submit Necessary Documents
Provide the self-attested copies of the following documents:
Document Type
Accepted Proofs
Identity Proof
Aadhaar Card
PAN Card
Voter ID
Passport
Driving License
Address Proof
Any of the following:
Aadhaar
Utility bill
Passport
Bank statement
Photographs
Two passport-sized photographs (recent)
Initial Deposit
₹1000 either as cash or cheque (for the initial instalment)
Note: Keep original documents with you for in-person verification. Per the Government Savings Promotion Rules (GSPR), submission of PAN is mandatory if the balance in any account exceeds ₹50,000, aggregate deposits across all Post Office schemes exceed ₹10 lakh, or annual interest exceeds ₹10,000.
Step 4: Select the Account Type
Select any of these:
A Single Account
A Joint Account (for up to 3 adults)
Minor Account (10+ years or guardian-operated)
Guardian-operated Account (for individuals declared of unsound mind under applicable law)
Step 5: Get the Passbook and Confirmation
After the verification, you will get an RD passbook from the Indian Post Office. It specifies details like the Post Office RD interest rate, account number, etc. You will also receive the confirmation receipt for the deposit made.
To automate monthly deposits, you can link your account and configure it through mobile banking or by setting up the standing instructions.
Tax Treatments for Post Office RD Scheme 1000 Per Month 5 Years
Interest earned on the Post Office RD scheme 1000 per month is subject to Tax Deducted at Source (TDS) only when the aggregate yearly interest from bank/co-operative bank/Post Office deposits exceeds ₹50,000 (non-seniors) or ₹1,00,000 (senior citizens), effective 1 April 2025, under Section 194A. However, it remains fully taxable under the Income Tax Act and must be reported in the income tax return under ‘Income from Other Sources’.
RD deposits do not qualify for deductions under Section 80C, as no RD-specific exemption is listed in the National Savings Institute (NSI) or Department of Posts rules. The scheme does not offer upfront tax benefits under Section 80C. It is backed by the Government of India, making it a low-risk savings option that provides fixed returns.
Key Takeaways
The Post Office RD ₹1000 per month 5 year plan is a fixed-income savings option with government backing. It is structured for depositors who prefer predictable returns and minimal exposure to market risk. The scheme features low entry requirements, account flexibility (including joint and minor accounts), and a defined tenure, making it suitable for those pursuing long-term financial goals through disciplined monthly deposits.
FAQs
How much will I receive by depositing ₹1000 every month for 5 years in the Post Office RD plan?
At an interest rate of 6.7% per annum, depositing ₹1,000 each month for 60 months (a total of ₹60,000) will yield a maturity value of about ₹71,366. This includes an interest earning of approximately ₹11,366.
Is withdrawing money before 5 years under the Post Office RD plan possible?
The premature closure is permitted once 3 years have passed from the account opening date. But the interest will be recalculated at the POSA rate, not the RD rate.
What are the disadvantages of missing a monthly deposit in the RD account?
Missing a monthly deposit will result in a default fee of ₹1 per ₹100. If there are four successive defaults, then the account will be discontinued. However, it can be renewed within two months from the month of the fifth default by paying all pending instalments along with the applicable default fees, as per Post Office Savings Bank (POSB) rules. Failure to revive within this period may result in the account remaining discontinued.
Is extension beyond 5 years permissible under the Post Office RD 1000 per month 5 years scheme?
Yes, the RD account can be continued for up to 5 more years after the initial 5-year term, subject to a written request submitted to the Post Office. Applicable rules govern the continuation, and the interest payable during the extended period will follow the terms specified at the time of continuation, not necessarily the original rate. Refer to the Post Office Savings Account (POSA) rules and maturity table for detailed provisions.
Is it mandatory to have a nomination under the Post Office RD 1000 per month 5 years scheme?
Nomination is optional, but it is advantageous. It enables the payout of the maturity amount to your nominee if there are unexpected circumstances. Adding or changing nominees is allowed anytime during the scheme’s tenure.
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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).
Generate wealth Earn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^ On premiums (under 80C) and on maturity (under 10(10D))
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