The Post Office RD ₹1,500 per month for 5 years is a government-backed savings plan, which provides regular monthly savings. The scheme currently offers 6.7% per annum interest (compounded quarterly), as notified by the Ministry of Finance for the applicable quarter under Post Office Small Savings Schemes. Interest rates are reviewed quarterly by the government.
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Understanding the Post Office RD ₹1,500 Monthly Scheme
The Post Office RD ₹1,500 monthly plan is a fixed-income recurring deposit plan that is operated under the Post Office Savings Bank (POSB) system. Investors need to pay a fixed sum each month for five years and receive compound interest on the deposits.
Unlike market-oriented investments, the returns from Post Office recurring deposits are guaranteed by the government and fairly stable. However, interest rates may be adjusted periodically. Regular contributions by the depositors develop financial discipline, and this allows the accumulation of wealth systematically.
How Your ₹1,500 Monthly Investment Grows
A recurring deposit grows through quarterly compounding. Every instalment earns interest from the time of deposit until maturity.
Estimated Return Calculation
The RD maturity works on the basis of the following formula
M = R × [(1 + i)^n − 1] ÷ [1 − (1 + i)^(-1/3)]
Terms used in RD maturity Calculator
R
Monthly deposit (₹1,500)
i
Quarterly interest rate (6.7% ÷ 4 = 0.01675)
n
Number of quarters (20)
Investment Outcome
Total amount invested: ₹90,000
Estimated maturity value: ₹1,07,049
Approximate interest earned: ₹17,049
Key Features of Post Office RD Scheme
The Post Office RD scheme provides several operational features that ensure flexibility, accessibility, and structured savings for investors. Key features include:
Minimum Deposit: The scheme has a minimum monthly deposit of ₹100 in multiples of ₹10, thus making it affordable to investors with different saving abilities.
Maximum Deposit: There is no limit on the maximum amount of contribution that can be made, and thus, an investor can deposit larger sums, and the corpus can grow with the passage of time.
Default Penalty: A penalty of ₹1 per ₹100 is imposed on every month of missed instalment, which will encourage regular and disciplined monthly deposits.
Transfer Facility: RD accounts can be transferred between post offices across India run by India Post. This makes the RD investments convenient when there is a change of residence or moving to a new place.
Nomination Facility: Funds can be transferred easily in case of unexpected situations, as the investors can add or alter the nomination details at any time within the period of account tenure.
Account Continuation: The account is allowed to continue beyond the five years, as per the applicable rules, by applying at the Post Office after the first five-year period has ended.
Eligibility to Open the Post Office RD ₹1,500 Account for 5 Years
Under the Post Office Savings Bank rules, the Post Office RD scheme permits various kinds of account holders. The applicant must be a resident individual in India.
Single Adult Account: A person is eligible to open an account in their own name as long as they are a resident of the age of 18 years or above.
Joint Account (up to three adults): Two types of joint accounts are permitted:
Joint 'A' Type: Operated jointly by all depositors or surviving depositors.
Joint 'B' Type: Operated by any one depositor or surviving depositors independently.
Guardian on Behalf of Minor: An account may be created and run by a parent or a legal guardian on behalf of a minor.
Minor (10 Years or Above): A minor who has reached the age of 10 years is able to open and operate the account independently.
Guardian on Behalf of Person of Unsound Mind (Authorised Account): A guardian is allowed to open and operate an account on behalf of a person legally recognised as of unsound mind.
Multiple Accounts: A person is allowed to open as many RD accounts as they want, either individually or jointly with others.
Notes: When a minor account holder turns 18 years old, they must submit a new Account Opening Form (AOF) along with updated KYC documents to convert the account into an adult account.
RD accounts can also be opened through e-Banking or Mobile Banking facilities. A Post Office Savings Account is mandatory to use the internet banking services.
How to Apply for the Post Office RD Scheme?
Opening a Post Office RD ₹1,500 monthly account involves a simple process at an India Post branch or through eligible digital services.
Steps to Apply Online (via IPPB App)
Post Office RD accounts can be opened online using linked Post Office savings accounts or approved digital banking services, as per India Post.
Download App: Install the India Post Payments Bank (IPPB) mobile app and log in.
Open Savings Account: You must have an active IPPB savings account (required to use online RD).
Navigate to DOP Products: Choose Recurring Deposit under the Department of Post products.
Enter Account Details: Enter the amount ₹1,500 to deposit, tenure and the nominee details.
Fund RD Account: Transfer funds or set standing instructions from the IPPB account.
Confirm Account Creation: Check the information and activate the RD account online.
Steps to Apply Offline
To open a Post Office RD account in person, visit a local branch and open the account by performing the following steps:
Visit Post Office: Go to your nearest India Post branch offering RD services.
Fill Application Form: Take the RD account opening form and give personal and nominee information.
Submit KYC Documents: Provide documents of self-attested identity (Aadhaar, PAN, Voter ID, etc.) and address.
Select Account Type: Choose single, joint, minor, or guardian-operated account.
Deposit Amount: Pay the first instalment of ₹1,500 either with cash or a cheque.
Receive a Passbook: The Post Office gives a passbook to track the deposits and transactions.
Loan, Default, and Withdrawal Rules
The scheme provides flexibility while encouraging regular savings.
Loan Facility
Depositors are eligible for a loan of up to 50% of their total deposits after one year and completion of twelve instalments. Repayment can be made in a lump sum or in monthly instalments, with interest at 2% above the RD rate. Any unpaid balance is deducted on closure.
Default Rules
If up to four instalments are missed, the maturity period can be extended and the missed payments deposited later. If more than four defaults occur, the account becomes discontinued but can be revived within two months by paying pending instalments with a revival fee of ₹1 per ₹100 per month.
Premature Closure
An RD account can be closed prematurely after three years from the opening date. In such cases, interest is paid at the Post Office Savings Account rate instead of the RD rate. Premature closure is not allowed during the period for which advance deposits have been made.
Tax Implications on Post Office RD Scheme
The Post Office RD scheme does not provide any initial tax advantage, and the interest received on it is subject to full taxation as per the Income Tax Act as income under the head Income from Other Sources. Tax Deducted at Source (TDS) is payable where the total annual interest on bank, co-operative bank, or Post Office deposits is over ₹50,000 in the case of general citizens and ₹1,00,000 in the case of senior citizens under Section 194A. Also, RD deposits are not subject to tax deductions in Section 80C.
Key Takeaways
The Post Office RD ₹1,500 per month for 5 years is a government-guaranteed savings plan whose returns are stable and government-backed, being compounded quarterly at a fixed rate of interest. It allows structured and disciplined monthly investing with minimal deposit requirements, flexible account set-ups, and sovereign security. Its features, such as the borrowing facility, option for early withdrawal and simple access, make the scheme appropriate for careful investors wishing to build wealth steadily. Interest is, however, subject to tax, and the plan does not provide benefits under Section 80C.
Frequently Asked Questions
How much will I get by investing ₹1,500 per month in Post Office RD for 5 years?
A monthly deposit of ₹1,500 over 5 years would make the total investment ₹90,000. At an interest rate of 6.7% per annum (compounded quarterly), the estimated maturity value comes to ₹1,07,049, giving interest of approximately ₹17,049. The actual figure may vary with changes in interest rates.
Can I miss monthly instalments in the RD account?
In case of missing up to four monthly instalments, the maturity period may be extended, and the missed payments may be deposited in future. When over four instalments are not paid, the account gets discontinued, but can be reinstated within the given time by paying outstanding instalments with relevant charges.
Can I withdraw or close the RD account before 5 years?
Yes, the account may be closed after three years from the date it was opened. The interest, however, will be calculated at the Post Office Savings Account rate instead of the RD rate, which may lower total returns.
Does the Post Office RD ₹1,500 plan provide tax benefits?
No, the scheme does not offer tax deductions in Section 80C. The amount of interest is taxed as income from other sources, and the deduction of TDS is done when the amount of interest earned is over the limits stipulated as per the rules of the income tax.
˜The insurers/plans mentioned are arranged in order of highest to lowest first year premium (sum of individual single premium and individual non-single premium) offered by Policybazaar’s insurer partners offering life insurance investment plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in
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 01-02-2026
^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.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
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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 wealths 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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