Post Office RD ₹5,000 per month over 5 years is a savings scheme provided by the government, by which individuals can accumulate a fixed corpus by depositing a certain sum every month. The scheme is currently providing 6.7% p.a. interest (compounded quarterly) as declared by the Ministry of Finance under Post Office Small Savings Schemes. The government reviews interest rates after every quarter.
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Understanding the Post Office RD ₹5,000 Monthly Scheme
The ₹5,000 monthly plan is a fixed-income savings option, part of Post Office Recurring Deposit. Investors deposit a fixed amount every month for five years and earn compound interest on their contributions. Unlike market-linked investments, returns are government-guaranteed and stable, though interest rates may change periodically. The plan motivates regular saving and enables participants to grow their wealth gradually and with discipline.
How Your ₹5,000 Monthly Investment Grows
Instalments are compounded at quarterly intervals in a recurring deposit, with each instalment earning interest till 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 (₹5,000)
i
Quarterly interest rate (6.7% ÷ 4 = 0.01675)
n
Number of quarters (20)
Investment Outcome
Total amount invested: ₹3,00,000
Estimated maturity value: ₹3,56,775 (approx.)
Approximate interest earned: ₹56,775
Note: Actual maturity value may vary if interest rates change.
Key Features of Post Office RD Scheme
The Post Office RD scheme offers flexibility in operations and organised savings plans.
Feature
Details
Nomination Facility
Investors can add or modify nomination details at any time, during the tenure of the account
Transfer Facility
RDs are also transferable among CBS-enabled Post Offices in India, in which account holders can continue deposits without encountering difficulties when transferring or changing address.
Default Penalty
Each missed instalment should be levied at ₹1 per ₹100 of the monthly instalment as a penalty to discipline savings and make contributions on time.
Maximum Deposit
The maximum amount of monthly deposit is not set, and thus, investors can invest more and create a larger corpus over time.
Account Continuation
Once the first five-year term is over, the RD account can be renewed for a further term, depending on the relevant rules, which would guarantee further savings and interest accumulation.
Minimum Deposit
The scheme will permit a minimum monthly deposit of ₹100 in multiples of ₹10, thus being affordable to investors with different saving capacities.
Eligibility to Open the Post Office RD ₹5,000 Account
The scheme supports various categories of account holders under the Post Office Savings Bank rules.
Category
Eligibility Criteria
Single Adult
Any resident Indian aged 18 years or above.
Guardians for Minors
A parent or legal guardian can open an account for a minor.
Minors (10+ years)
Minors aged 10 years or above can operate an account independently.
Joint Accounts
Up to three adults (Joint A or Joint B).
Guardians for Special Needs
Guardian can operate an account for a person of unsound mind.
Multiple Accounts
Individuals can open multiple RD accounts singly or jointly.
Notes:
Minor accounts must be converted to adult accounts after attaining 18 years with updated KYC.
Only resident individuals are eligible to open accounts.
NRIs cannot start new RD accounts, but existing accounts may continue under certain conditions.
How to Apply for the Post Office RD Scheme
You can open a Post Office RD account either online or offline.
Steps to Apply Online (via IPPB App)
To register a Post Office RD account online with the India Post Payments Bank IPPB app, one must follow the steps below:
Download and Log In:Download the IPPB mobile application and log in to it.
Ensure Active Account: An active IPPB savings account is required.
Select RD Option: Choose Recurring Deposit under the Department of Post products.
Enter Details: Enter the deposit amount, the tenure and the nominee details.
Fund Account: Fund your account or set a standing instruction.
Confirm Activation: Check the details and activate the RD account.
Steps to Apply Offline
To open a Post Office RD account in the offline mode, do the following steps:
Visit the Branch: Visit any nearest Post Office branch.
Fill Application: Fill the application form for opening the RD account.
Choose Account Type: Choose(single, joint, minor) the type of account.
Deposit First Instalment: Pay the first instalment of the deposit.
Receive Passbook: Collect the passbook to track transactions.
Loan, Default, and Withdrawal Rules
The scheme provides flexibility while encouraging regular savings.
Loan Facility: A loan of up to 50% of total deposits is available after one year and completion of twelve instalments. Interest is charged at 2% above the RD interest rate.
Default Rules: If up to four instalments are missed, the maturity period may be extended. If more than four instalments are missed, the account becomes discontinued but can be revived within two months by paying dues with penalties.
Premature Closure: The account may be closed after three years however interest will be at the Post Office Savings Account rate and not the RD rate.
Tax Implications on Post Office RD Scheme
The interest earned on this recurring deposit is taxable and must be included under Income from Other Sources in your income tax return filings. Tax Deducted at Source (TDS) can be applied in situations where the sum of total interest received on bank or Post office deposits exceeds that provided in Section 194A, as well as based on the nature of the investor.
Key Takeaways
The Post Office RD ₹5,000 per month over 5 years is a government-sponsored savings programme that allows disciplined investors to invest with predictable, steady returns every quarter. It facilitates the systematic wealth creation with sovereign security, flexible account features, a loan facility, and easy application processes. Although interest is taxable with no Section 80C benefit, the scheme is still appropriate to the investor who is seeking low-risk but structured savings and corpus growth over the long term.
Frequently Asked Questions
Is it possible to deposit over ₹5,000 in a Post Office RD account per month?
Yes in the Post Office RD there is no upper limit for deposits. You can invest more than ₹5,000 by opening multiple RD accounts either in your name or your partner's name. Thus you can accumulate a bigger corpus depending on your savings ability.
Does the interest rate remain constant throughout the 5-year term of the RD?
Each quarter, the Ministry of Finance announces the interest rate and may revise it. But after opening an RD account, the interest rate on that particular account will be fixed as long as the account remains open.
What happens if I delay a monthly RD payment?
Every missed instalment per month is charged a penalty of ₹1 per ₹100. In case of not receiving up to four instalments, the account is not closed, although after more than four defaults, it can be closed unless revived.
Can I borrow from my Post Office RD account?
Yes, you can avail a loan of up to 50% of your total deposits at an interest rate which is 2% above the RD interest rate after one year has passed and you have made at least twelve instalments.
˜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
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^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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