The Post Office Recurring Deposit (RD) Scheme is a reliable investment option in India that allows individuals to grow their savings with government-backed security. If you invest ₹1,20,000 in this scheme, you can receive ₹7,09,732 upon maturity, making it a low-risk, high-reward savings plan. In this article, we’ll explore everything you need to know about this scheme, including benefits, interest rates, step-by-step investment guidance, and expert tips to maximize returns.
Post Office Scheme
| Feature | Details |
|---|---|
| Scheme Name | Post Office Recurring Deposit (RD) |
| Investment Amount | ₹1,20,000 (₹10,000 per month) |
| Maturity Amount | ₹7,09,732 after 5 years |
| Interest Rate | 6.7% per annum (compounded quarterly) |
| Tenure | 5 years |
| Premature Withdrawal | Allowed after 1 year (50% of balance) |
| Tax Benefits | No tax deduction under Section 80C |
| Official Website | India Post |
The Post Office RD scheme is a secure and disciplined savings option for investors seeking fixed returns with low risk. With a 6.7% annual interest rate, quarterly compounding, and a government guarantee, it is ideal for those looking to accumulate wealth over time. By investing ₹1,20,000 over 5 years, you can grow your savings to ₹7,09,732, making it a great choice for long-term financial planning.
What is the Post Office Recurring Deposit Scheme?
The Post Office RD is a government-backed investment scheme that allows investors to save systematically with monthly deposits. It provides a stable interest rate of 6.7% per annum, compounded quarterly, making it an ideal savings plan for risk-averse investors.
Unlike traditional Fixed Deposits (FDs), where a lump sum amount is invested at once, Post Office RD allows you to deposit a fixed amount every month, making it a disciplined savings option for salaried individuals, small business owners, and even students.
How Does It Work?
- You open an RD account in the post office with a minimum monthly deposit of ₹100.
- Deposit a fixed amount every month for a tenure of 5 years.
- Interest is calculated quarterly and compounded for maximum growth.
- After maturity, you receive the total investment along with accrued interest.
Post Office RD Interest Rate & Maturity Calculation
The Post Office RD interest rate is 6.7% per annum, compounded quarterly. If you deposit ₹10,000 every month for 5 years, here’s how your investment will grow:
| Year | Total Deposited (₹) | Interest Earned (₹) | Total Balance (₹) |
| 1 | 1,20,000 | 4,020 | 1,24,020 |
| 2 | 2,40,000 | 17,340 | 2,57,340 |
| 3 | 3,60,000 | 39,000 | 3,99,000 |
| 4 | 4,80,000 | 69,600 | 5,49,600 |
| 5 | 6,00,000 | 1,09,732 | 7,09,732 |
Benefits of Investing in Post Office RD
- Guaranteed Returns: Backed by the Government of India, making it a safe investment.
- Compounded Interest: Quarterly compounding helps in wealth accumulation.
- Easy Investment: Start with a minimum of ₹100 per month with no upper limit.
- Flexible Withdrawals: Premature withdrawal is allowed after 1 year.
- Transferable: The account can be transferred across India to any post office.
- No Market Risk: Unlike mutual funds or stock investments, RD ensures fixed returns.
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How to Open a Post Office RD Account?
Step 1: Choose Your Nearest Post Office
Visit your nearest post office or check the India Post website to find the closest branch.
Step 2: Collect & Fill the RD Account Form
Download the RD Account Opening Form from India Post or collect it at the post office.
Step 3: Submit the Required Documents
You need to provide:
- ID Proof (Aadhaar Card, PAN Card, Voter ID, etc.)
- Address Proof (Electricity Bill, Aadhaar, Passport, etc.)
- 2 Passport-size Photos
Step 4: Deposit Your First Installment
Make an initial deposit (minimum ₹100), and you will receive a passbook with your investment details.
Step 5: Set Up Auto-Payment (Optional)
To avoid missing payments, set up an automatic deduction from your bank account.
Expert Tips to Maximize Your RD Returns
- Increase Monthly Deposits: If possible, deposit more every month to accelerate savings growth.
- Avoid Premature Withdrawals: Let your money compound fully for maximum benefit.
- Set Reminders: Ensure timely deposits to prevent penalties and maintain account activity.
- Consider a Joint Account: Open an RD account with family members to increase savings discipline.
FAQs On Post Office Scheme
1. Can I open a Post Office RD account online?
Yes, you can open a Post Office RD account online via India Post’s eBanking portal.
2. What happens if I miss an RD installment?
A default fee of ₹1 per ₹100 deposit is charged. If you miss 4 consecutive payments, the account is deactivated.
3. Is the maturity amount taxable?
Yes, the interest earned is taxable, and no TDS is deducted at source.
4. Can NRIs invest in Post Office RD?
No, only Indian residents are eligible for this scheme.
5. Can I withdraw the full amount before maturity?
Full withdrawal is allowed only after 5 years. However, partial withdrawals (up to 50%) can be made after 1 year.
