Post Office Recurring Deposit Interest Rates

by SMCIB on Monday, 18 March 2024

Post Office Recurring Deposit Interest Rates

Post offices aren't just for sending mail anymore—they're also your ticket to smart financial planning. They offer a range of financial services, from savings schemes to life insurance. Among these choices, post office Recurring Deposits (RDs) are like shining stars. They're super popular compared to regular fixed deposits and other long-term plans. If you're looking to save money wisely, post office RDs are the way to go.

What makes them special? Well, it's mainly because of the post office RD interest rates. The RDs offer a cool 6.70% interest rate per year, which makes them really attractive for people wanting to grow their savings. Plus, the interest gets added up every three months, which means your money keeps growing until you take it out.

Why stick to old ways of saving when you can make your money work harder with post office RDs? With their great rates and easy growth, they're the key to making your money go further.

Post Office Recurring Deposit Highlights



Interest Rate

6.70% (As of January 2024)

Minimum Deposit

₹100 per month


5 years

Maximum Deposit

No upper limit (Any amount in multiples of ₹10)

Missed Deposit Penalty

₹1 for every ₹100 missed deposit

Compounded Frequency


Premature Withdrawal


Loan Against RD Facility


Nomination Facility



Comparison Of Interest Rates Of Various Post Office Savings Schemes

Now let us compare the post office interest rates for various saving schemes.


Interest Rate (Effective from 01/04/2023)

Minimum Investment

Maximum Investment


Tax Implications

Post Office Savings Account

4% per annum (p.a.)

Rs. 500

No limit

Resident Indian, minors, and adults

Tax-free interest on earnings up to Rs. 50,000

Post Office Time Deposit Account (TD)

One-year – 6.9% p.a.

Rs. 1,000

No limit

Resident Indian, minors, and adults

Tax benefits for up to 5 years under Section 80C on deposits. TDS deduction on interest above Rs. 40,000 p.a.

Post Office Monthly Income Scheme (MIS)

7.4% per annum (payable monthly)

Rs. 1,000

Single account: Rs. 9 lakh Joint account: Rs. 15 lakh

Resident Indian, minors, and adults

Taxable interest earnings. No deduction under Sec 80C. TDS deduction on interest exceeding Rs. 40,000 p.a. (Rs. 50,000 for senior citizens)

Senior Citizen Savings Scheme (SCSS)

8.2% p.a. (Compounded Quarterly)

Rs. 1,000

Maximum deposit limit: Rs. 30 lakh

Individuals aged > 60 years or 55-60 years for retired civilian or defense employees

Tax benefits under Section 80C. TDS deduction on interest exceeding Rs. 50,000 p.a.

15-year Public Provident Fund Account (PPF)

7.1% p.a. (Compounded annually)

Rs. 500 per financial year

Rs. 1.5 lakh per financial year

Resident Indian, minors, and adults

Tax rebate under Section 80C for deposits (up to Rs. 1.5 lakh p.a.), tax-free interest earnings

National Savings Certificates (NSC)

7.7% p.a. (Compounded annually)

Rs. 1,000

No limit

Resident Indian, minors, and adults

Tax rebate under Section 80C for deposits (up to Rs. 1.5 lakh p.a.)

Kisan Vikas Patra (KVP)

7.5% p.a. (Compounded annually)

Rs. 1,000

No limit

Resident Indian, minors, and adults

Interest is taxable, but maturity amount is tax-free

Sukanya Samriddhi Accounts

8% p.a. (Compounded annually)

Rs. 250 per financial year

Rs. 1.5 lakh per financial year

Girl Child – up to 10 years from birth

Investment exempt under Section 80C. Interest and maturity amount are tax-free


Features Of Post Office RD Scheme


Here's what makes it stand out -


  • The post office interest rates for RD stand at 6.70% per annum, compounded quarterly.
  • The duration of a post office RD spans over a period of 5 years.
  • To initiate an RD account, a minimum deposit of Rs. 10 is required per month.
  • Advanced deposits of at least 6 months receive a rebate.
  • There exists no ceiling on the upper limit, as long as it is in multiples of 5.
  • Transfer of Post Office RD accounts between post offices is permissible.
  • Two individuals can open a joint RD account.
  • A penalty of 5 paise for every Rs. 5 is levied for missed deposits.


How To Calculate Post Office RD Interest Rate?

Here's a simple guide on how to calculate the interest rate for a post office RD account -

Understand The Formula: The formula used to calculate returns from the post office RD account is as follows -

M = R[(1 + i)^n - 1] / [1 - (1 + i)^(-1/3)]

Where -

M = Total value of maturity

R = Amount of monthly deposits

n = Time period in years

i = Interest rate offered

Example Calculation: Let's say you plan to deposit Rs. 10,000 every month for 5 years in a post office RD account that offers a 6.7% rate of interest.

Here are the values -

R = Rs. 10,000

n = 5

i = 6.7

Apply The Formula: Inserting these values into the formula, we get -

M = 10000[(1 + 6.7)^5 - 1] / [1 - (1 + 6.7)^(-1/3)]

M = Rs.7,13,659.

Hence, with a total deposit of Rs. 6,00,000, you will receive a maturity amount of Rs. 7,13,659. This indicates an interest of Rs. 1,13,659 earned over the 5-year period.

Note: The calculation is as per a third-party calculator.

By following this calculation method, you can estimate the maturity value of your post office RD account based on your monthly deposits and the interest rate offered.

Components Of The RD Interest Rates In Post Office 2024

Let's unravel the components of the post office RD interest rates -

  1. Duration: In contrast to bank recurring deposits, the tenure of a post office RD is fixed at 5 years. Many individuals opt for an RD account as a buffer for unforeseen emergencies in the near future, making it a medium-term investment choice. At present, the minimum tenure for a post office RD is 5 years, necessitating account activity during this period. For those wishing to continue their RD account beyond 5 years, an extension provision allows for an additional 5 years, resulting in a maximum tenure of 10 years.
  2. Minimum And Maximum Deposits: A recurring deposit is among the favored investment avenues to yield favorable returns on monthly investments. The minimum deposit is deliberately set low to accommodate individuals who may be apprehensive about deposit amounts and interest rates. According to post office RD regulations, the minimum monthly deposit is Rs. 10, with no maximum limit on deposits. Deposit increments are permitted in multiples of Rs. 5, enabling investors to contribute whatever amount is feasible.
  3. Deposit Dates: During the RD tenure, a total of 60 deposits are required, equating to one deposit per month for 5 years. The initial deposit is made upon opening the account, followed by subsequent monthly deposits due by a specific date, determined by the account opening date. Specifically, accounts opened between the 1st and 5th of a month necessitate monthly payments for the subsequent 5 years. For accounts opened after the 15th of a month, payments must be made between the 16th and the last day of subsequent months. Deposit methods include demand drafts, pay orders, or cheques.
  4. Penalties For Delayed RD Deposits: Post office RDs permit a maximum of 4 defaults; failure to make the 5th monthly payment renders the account inactive (discontinued account). Discontinued accounts can be reactivated within 2 months of the 5th default. As per post office RD regulations, a penalty of 5 paise is imposed for every Rs. 5 to be deposited in case of default. This fine is levied in addition to the missed deposit amount to reactivate the account.
  5. Post Office RD Rebate: To incentivize advance deposits, post office RDs offer rebates. Although the rebates may not amount to a significant sum individually, they contribute to significant savings for other purposes.

Premature Withdrawal Of Post Office RD

Did you know that individuals can tap into their post office recurring deposits to meet urgent financial needs? Here's what you need to know about premature withdrawal -

  • Withdrawal Conditions: You can only withdraw from your Post Office RD after one year of opening the account. However, you're limited to withdrawing up to 50% of the available funds.
  • Interest On Withdrawn Funds: A simple rate of interest is applied to the withdrawn amount. This interest is calculated based on the prevailing rate at the time of withdrawal.
  • Repayment: The withdrawn amount, along with the applicable interest, must be repaid in a lump sum. This ensures that the RD account remains on track for its intended tenure.

Understanding the process of premature withdrawal allows individuals to make informed decisions about managing their Post Office RD and meeting their financial needs effectively.


Post Office RD Loan Facility 

Here's what you need to know about the RD loan facility -

  • Eligibility: After depositing 12 instalments and maintaining the account for a year, you can borrow up to 50% of the balance credit in your RD account.
  • Repayment Options: You have the flexibility to repay the loan amount either in full or through equal monthly instalments.
  • Interest Rate: The loan interest is calculated at a simple rate of 2% based on the RD interest rate applicable to your account.
  • Interest Calculation: Interest on the loan amount is computed from the withdrawal date to the repayment date, ensuring transparency in the borrowing process.
  • Maturity Repayment: If the loan amount is not repaid by the maturity date of your RD account, the outstanding loan amount along with the accrued interest will be deducted from the maturity value of your RD account.

By leveraging the RD loan facility, you can access funds when needed while keeping your savings intact.

Eligibility Of The Post Office RD Interest Rate

Before diving into post office RD accounts, it's important to ensure you meet the eligibility criteria. Here's who qualifies -

  • Indian Nationals: Individuals who are citizens of India and are aged 18 years or above are eligible to open and operate an RD account at the Post Office, either individually or jointly.
  • Minors: Even youngsters can start their savings journey! Minors aged 10 years and above are eligible to open an RD account, with their parents or guardians acting as the account operators on their behalf.

Documents Required To Open An RD Account

To open an RD account at the post office, you'll need to prepare the following documents -

  1. Account Opening Form: Complete the post office account-opening form, providing all necessary details accurately.
  2. Passport Size Photographs: Bring along two passport-size photographs of the account holder(s).
  3. Address And Identity Proof: Ensure you have valid address and identity proof documents. Accepted documents include Aadhaar card, passport, PAN card, or declaration in Form 60 or 61 as per the Income Tax Act, 1961. Additionally, you can use a driving license, voter’s identity card, or ration card.
  4. Nominee Selection: Choose a nominee for your RD account. This is an important step to ensure the smooth transfer of funds in case of unforeseen circumstances.
  5. Witness Signature: Have a witness sign the necessary documents to complete the formalities.

How Does Taxation Apply To A Post Office RD Account

When it comes to taxation, post office RD accounts offer a mix of exemptions and obligations. Here's what you need to know -

  • Tax Exemption Under Section 80C: Contributions made towards a Post Office RD account are eligible for tax exemption under Section 80C of the Income Tax Act. Individuals can claim up to Rs. 1.5 lakh per annum as tax exemption under this section.
  • Taxation On Interest: While contributions enjoy tax benefits, the interest generated through the Post Office RD scheme is subject to taxation. Individuals are required to pay taxes on the interest earned as per their income tax slab.
  • TDS Deduction On Interest: If the interest earned on the RD account exceeds Rs. 10,000 in a financial year, Tax Deducted at Source (TDS) is applicable. Individuals with an active PAN are subject to a TDS deduction rate of 10%, while those without a PAN are taxed at a higher rate of 20%.

By understanding these tax implications, individuals can effectively plan their finances and make informed decisions regarding their Post Office RD investments.

Post Office Recurring Deposit Rebate

Post office RDs offer attractive incentives to encourage advance deposits, providing a helping hand to individuals with varying financial resources. While these rebates may seem modest, they can significantly contribute to savings for other essential purposes. Let's explore the rebate options provided with a post office RD -

Number Of Advance Deposits Instalments

Quantum Of Rebate


Rs. 10 for every Rs. 100


Rs. 40 for every Rs. 100

Keep In Mind: These advance deposits must be made within a specific month.

Let's continue with Mr. John's example to illustrate how the rebate system operates. Mr. John receives an annual Diwali bonus and decides to allocate it towards advance deposits into his RD account. He opts to make payments for 10 months, totaling Rs. 1,000. According to the rebate system, he is eligible to receive a rebate of Rs. 1 for every Rs. 10 deposited. In this scenario, since he deposits Rs. 1,000, he earns a rebate of Rs. 100, which he can utilize for other purposes.

How Does Taxation Apply On RD?

Recurring Deposits (RDs) come with their own set of taxation rules. Here's how taxation applies to RDs -

  • Tax Deducted At Source (TDS): The interest earned on RDs is subject to Tax Deducted at Source (TDS) at a rate of 10%. However, if the interest earned is equal to or less than Rs. 10,000, no TDS is deducted. Without providing PAN information, the TDS rate is higher at 20%.
  • Exemption Under Section 80C: RD investments in banks do not qualify for tax exemption under Section 80C of the Income Tax Act, 1961. However, investments in Post Office RDs with a tenure of five years are eligible for tax deduction under Section 80C. This allows investors to claim deductions of up to Rs. 1.5 lakhs.
  • Form 15G Submission: Even if an individual's income falls within the non-taxable income slab, they still need to submit Form 15G to avoid taxation on both fixed and recurring deposits.
  • Income Tax Slab: The interest earned from RDs is subject to income tax as per the income tax slab of the RD holder.

Understanding these taxation rules helps investors make informed decisions about their RD investments and plan their finances effectively.

Summing Up!

In summary, post office Recurring Deposits (RDs) stand out as a lucrative option for individuals seeking steady growth of savings with minimal financial commitments. With an attractive interest rate of 6.70% per annum and flexible monthly deposits starting at just Rs. 10, Post office RDs offer accessibility and affordability to a wide range of investors. Despite constraints such as penalties for missed deposits, the benefits, including premature withdrawal options and loan facilities, make them a compelling choice for prudent financial planning. Moreover, their tax-efficient nature, with deductions under Section 80C of the Income Tax Act, adds an additional layer of appeal. Overall, Post office RDs emerge as a reliable avenue for long-term wealth accumulation, catering to the diverse needs of investors while ensuring financial stability and growth.


  1. What is the interest rate offered on post office RDs?
    The interest payable on post office recurring deposits is 6.7% p.a.
  2. What is the minimum deposit amount in a post office RD?
    The minimum deposit amount in a post office RD is Rs.100.
  3.  What if I do not make my post office RD instalment on time?
    A default penalty of Rs.1 for every Rs.100 shall be charged for each failed month.
  4. Can I avail a loan on my post office RD?
    Yes, you can borrow up to 50% of the balance credit in the account after depositing 12 instalments and keeping the account open for one year.
  5. Can I extend my post office RD?
    Yes, you can extend your post office RD for another 5 years by submitting an application to the concerned post office.
  6. How is RD interest calculated?
    Interest is compounded on a quarterly basis when it comes to recurring deposits.
  7. Which is the better option when it comes to opening an RD, in a bank or post office?
    It is best to open an RD account where you can avail high interest rates.
  8. What is the penalty levied on not paying the instalments on time?
    The account will be suspended if the number of defaults is more than four. However, it can be regularised within two months by paying a default fee.
  9. Can minors open a post office RD account?
    Yes, minors are eligible to open a post office RD account.
  10. What is the tenure of a post office RD?
    Post office RD accounts have a tenure of 5 years.
  11. Is post office RD a good and safe investment?
    Recurring deposits are one of the best ways you can achieve your long-term financial goals with just a small part of your monthly earnings. On top of that, post office RD interest rates help you to save a substantial amount of money with a minimal deposit amount. However, it is advisable to read all the terms and conditions before opting for any investment.
  12. Can I transfer my Post Office RD account from one Post Office to another?
    Yes, you can transfer your Post Office RD account from one Post Office to another Post Office of your choice. The transfer can be done by filling out the necessary form and paying a nominal fee.
  13. Is TDS applicable on the interest earned on a Post Office RD account?
    Yes, TDS (Tax Deducted at Source) is applicable on the interest earned on Post Office RD accounts. If the interest earned on Post Office RD accounts exceeds Rs. 10,000 in a financial year, the Post Office deducts TDS at the rate of 10% before crediting the interest to your account.
  14. Can I use the Post Office RD Calculator to calculate my savings for multiple tenures?
    Yes, you can use the Post Office RD Calculator to calculate your savings for multiple tenures by entering the investment amount, tenure, and interest rate separately for each tenure. The calculator will provide you with the savings and total interest earned for each tenure.
  15.  Is the nomination facility provided by a Post office RD account?
    Yes, a nomination facility is provided on a Post office recurring deposit.


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