The Post Office Recurring Deposit (RD) scheme remains a popular savings option, especially for those seeking assured returns with minimal risk. It's a government-backed scheme that encourages regular savings, allowing individuals to deposit a fixed amount every month for a period of five years.

Key Features of the Post Office RD Scheme

• Interest Rate: The current interest rate for the Post Office RD scheme is 6.7% per annum, compounded quarterly. This rate is applicable for the period from July 2025 to September 2025.
• Minimum and Maximum Deposit: You can start with a minimum deposit of ₹100 per month, and there is no upper limit on the deposit amount. Deposits can be made in multiples of ₹10.
• Tenure: The maturity period is 5 years (60 months) from the date of opening the account.
• Eligibility: Any Indian national over 18 years can open a PORD account singly or jointly (up to 3 adults). A parent or guardian can also open an account on behalf of a minor, and minors above the age of 10 can operate their own accounts with parental guidance. Upon turning 18, the minor needs to submit a new KYC and account opening form.
• Premature Closure: Premature closure is allowed after 3 years from the date of deposit. However, on premature closure, the interest rate applicable will be the Post Office Savings Account interest rate.
• Extension: You can extend the RD account for another 5 years by submitting an application at the post office. The interest rate at which the account was originally opened will be applicable during the extended period.
• Loan Facility: A loan facility is available up to 50% of the balance in the account after 12 installments have been deposited and the account has been running for at least a year.
• Transferability: The RD account can be easily transferred from one post office to another.
• Nomination: Nomination facility is available when opening the account. It is mandatory to add a nominee to ensure a smooth transfer of funds in case of the account holder's demise.
• Deposits: If the account is opened before the 16th of a month, subsequent deposits must be made by the 15th of each month. If opened after the 16th, deposits must be made between the 16th and the final working day of the month.
• Advance Deposits: Advance deposits of up to 5 years can be made if the account is not discontinued, and rebates are available for advance payments of 6 or more installments.
• Default Fee: Missed deposits incur a default fee for each month of default.

Tax Implications

Investments in the Post Office RD scheme are eligible for tax deduction up to ₹1.5 lakh per year under Section 80C of the Income Tax Act, 1961. However, the interest earned is taxable and added to the investor's taxable income, subject to the applicable slab rate. If the interest earned exceeds ₹10,000 per annum, Tax Deduction at Source (TDS) is applicable. The TDS rate is 10% if the investor provides their PAN, and 20% if PAN is not provided.

Earning Potential

To potentially accumulate a corpus close to ₹35 lakhs in 5 years, one would need to invest approximately ₹50,000 per month. Investing ₹50,000 monthly will result in a deposit of ₹30,00,000 over 5 years. With an annual interest rate of 6.7%, the interest earned would be approximately ₹5,68,291 which is subject to TDS deduction. Therefore, the maturity amount after five years would be around ₹35,68,291.

How to Open an Account

To open a Post Office RD account, you need to submit Form-1 at the nearest Post Office branch. As per recent notifications, it is now mandatory to provide your Aadhaar number and PAN when opening a new PORD account.

The Post Office RD scheme is a reliable option for those looking for a secure, government-backed investment with guaranteed returns.