Post Office Recurring Deposit
Build a savings habit — deposit a small amount every month and earn guaranteed returns.
Rate effective: July–September 2026 (Q2 FY 2026-27) · Last verified: July 2026 · Source: India Post
Reviewed by Tushar Paturde, CFP® — AMFI-registered Mutual Fund Distributor (ARN-129322)
What is Post Office Recurring Deposit?
The Post Office Recurring Deposit (RD) is designed for people who want to save regularly but cannot invest a lump sum. You commit to depositing a fixed amount every month for 5 years, and at the end you receive the total deposits plus compound interest.
This is an excellent tool for building financial discipline — the monthly commitment makes you prioritise saving, and the government guarantee means there is no risk of loss.
Who Should Invest?
- Salaried individuals who want to save a fixed amount every month
- Parents saving for a child's school fees 5 years from now
- First-time savers building the habit of regular investing
- Anyone who wants a safe alternative to a recurring bank deposit
Key Features
- Start with just ₹100 per month. No maximum limit.
- Interest compounded quarterly
- 5-year tenure. Extension allowed in blocks of 5 years.
- One missed instalment allowed per year (small penalty applies)
- Loan against RD available after 1 year
Eligibility — Who Can Open PO RD?
- Any resident Indian adult can open an RD account, individually or jointly with up to 3 adults
- A guardian can open an account on behalf of a minor or a person of unsound mind
- A minor above 10 years of age can open and operate an RD account in their own name
- NRIs cannot open a new Post Office Recurring Deposit
How to Invest in PO RD
- Visit any post office with a filled RD account opening form
- Submit KYC documents — PAN card and address proof
- Choose your fixed monthly instalment amount — minimum ₹100, in multiples of ₹10 thereafter, no upper limit
- Pay the first instalment and collect your passbook
- Continue depositing the same amount every month for 5 years, either at the counter or via standing instruction from a linked Post Office Savings Account
Premature Withdrawal and Loan Against PO RD
You can miss a handful of monthly instalments over the 5-year term, but each missed instalment attracts a small default fee, and the account can be discontinued if too many are missed — so treat the monthly deposit as a firm commitment, not an optional one. Premature closure of the full account is allowed after 3 years, at a lower interest rate than the full 5-year RD rate.
Once you've made at least one year of regular deposits, you can take a loan of up to 50% of the balance in the account, repayable with interest — useful if you need short-term liquidity without breaking the RD outright.
Taxation and ITR Reporting
Post Office RD gets no Section 80C deduction. Interest is taxable under "Income from Other Sources" at your slab rate. Unlike bank RDs, India Post currently does not deduct TDS on Post Office RD interest — but the interest is still fully taxable, so you're responsible for declaring and paying tax on it yourself, typically on an accrual basis each year.
Watch Out For
- No 80C tax benefit
- Premature closure before 3 years attracts lower interest rate
- Requires consistent monthly deposits — defaulting attracts penalty
PO RD Example
Depositing ₹5,000 every month for 5 years at the current 6.7% p.a. (compounded quarterly) builds up to roughly ₹3,54,000 at maturity — against total deposits of ₹3,00,000 — with the ₹54,000 interest portion taxable at your slab rate.
How PO RD Compares
A side-by-side look at PO RD against PPF, NSC, and the 5-year Post Office Time Deposit — all figures are the currently published, verified rates.
| Scheme | Rate (% p.a.) | Compounding | Tenure | Min Investment | Max Investment | 80C | TDS |
|---|---|---|---|---|---|---|---|
| PO RD | 6.7% | Quarterly | 5 years | ₹100/month | No limit | – | – |
| PPF | 7.1% | Annual | 15 years | ₹500/year | ₹1.5 lakhs/year | ✓ | – |
| NSC | 7.7% | Annual | 5 years | ₹1,000 | No limit | ✓ | – |
| POTD 5Y | 7.5% | Quarterly | 5 years | ₹1,000 | No limit | ✓ | Yes |
Compare All NSS Schemes
See how PO RD compares to all other National Savings Schemes in one table.
← View All NSS Interest RatesAll NSS Schemes
Frequently Asked Questions
What is the current Post Office RD interest rate?
6.7% p.a., compounded quarterly.
What happens if I miss an RD instalment?
A small default fee applies for each missed monthly instalment. Missing too many instalments can lead to the account being discontinued, so budget the monthly deposit as a fixed commitment.
Can I withdraw my Post Office RD before 5 years?
Full premature closure is allowed after 3 years, at a lower rate than the full 5-year RD rate. You can also take a loan against the balance after 1 year instead of closing it.
Is Post Office RD interest taxable?
Yes, it's taxable under 'Income from Other Sources' at your slab rate. No TDS is deducted, so you need to declare and pay the tax yourself.
Can I extend my RD beyond 5 years?
Yes, a Post Office RD can be extended in blocks of 5 years after the original term matures.
Is there a maximum amount I can deposit in an RD?
No upper limit — you choose your fixed monthly instalment (minimum ₹100, in multiples of ₹10) and deposit that same amount every month.
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