Savings
Post office recurring deposit: 6.7% for everyone, and the rebate nobody claims
The 5-year post office RD pays 6.7% compounded quarterly, one rate for every age. The advance-deposit rebate, the ₹1 default fee and what closing early costs.
The post office recurring deposit pays 6.7% a year, compounded quarterly and paid at maturity, on every account opened between 1 October 2023 and 30 September 2026 — unchanged by the Ministry of Finance for the quarter ending 30 September 2026 and printed in the National Savings Institute’s own rate tables. There is no senior-citizen rate, no super-senior rate and no bulk rate: a 25-year-old and an 85-year-old opening the same ₹5,000 account on the same day both get ₹3,56,829 back after 60 instalments. The rate in force on the day you open runs for the full five years, whatever is notified afterwards.
Everything below is read from the National Savings Recurring Deposit Scheme, 2019, from the National Savings Institute’s rate tables and from India Post’s scheme page on 10 September 2026, and applies to the five-year account, which is the only recurring deposit India Post offers. A fresh notification arrives for 1 October 2026; confirm the rate on the day you open.
One rate, read from three government pages
The rate lives in three places, and they agree. The National Savings Institute’s rate-since-inception table for the scheme ends with the row “1.10.2023 to 30.09.2026: 6.7”. Its quarterly table for all national savings schemes shows the five-year recurring deposit at 6.7 in every column from April 2025 through the current quarter, with the post office savings account at 4.0 beside it. And the Department of Economic Affairs’ office memorandum of 30 June 2026 says the rates for 1 July to 30 September 2026 “shall remain unchanged” from the previous quarter. The Scheme’s own maturity table adds what governs the arithmetic: the interest is compounded quarterly.
| Accounts opened | RD rate |
|---|---|
| 1 July 2019 to 31 March 2020 | 7.2% |
| 1 April 2020 to 31 March 2023 | 5.8% |
| 1 April to 30 June 2023 | 6.2% |
| 1 July to 30 September 2023 | 6.5% |
| 1 October 2023 to 30 September 2026 | 6.7% |
Within the small savings family the RD is the lowest-paid product that has a term.
| Scheme | Rate for the quarter to 30 September 2026 |
|---|---|
| Post office savings account | 4.0% |
| 5-year recurring deposit | 6.7% |
| 1-year time deposit | 6.9% |
| 2-year time deposit | 7.0% |
| 3-year time deposit | 7.1% |
| 5-year time deposit | 7.5% |
| Senior Citizens Savings Scheme | 8.2% |
The gap against the five-year time deposit is 0.8 percentage point on the same five-year commitment, and it is the price of committing a small sum monthly instead of a lump sum. Where the money already exists, the post office time deposit ladder is the better product. The RD is for money that does not exist yet.
The rate is fixed on the day of opening. The Scheme prices maturity by opening date — the copy on the National Savings Institute’s site still prints ₹6,969.67 per ₹100 a month for accounts opened on or after 1 April 2020, the 5.8% era — so a later cut or rise changes nothing for a running account. The family page on post office savings schemes sets out which schemes float and which lock.
The instalment is the product
An account is opened with its first deposit, and that deposit becomes the account’s denomination: every later instalment must equal it. The minimum is ₹100 a month, in multiples of ₹10, with no maximum. The Scheme has no provision for changing the instalment later; a saver who wants to put in more opens a second account, which the Scheme permits — an individual may hold more than one account, singly or jointly.
The due date depends on the opening date. Open between the 1st and the 15th of a month and every instalment falls due by the 15th; open between the 16th and the last working day and it falls due by the last working day. Pick the half of the month that comes after your salary lands; it decides whether the default fee is ever charged.
A single resident adult can open the account, as can up to three adults jointly, a guardian for a minor or a person of unsound mind, and a minor who has turned ten in their own name, with fresh KYC at 18. NRIs, trusts and firms are excluded from the whole family. Nomination is mandatory and takes up to four names. The account can be opened, funded and borrowed against through India Post’s e-banking, which requires a post office savings account first.
What ₹5,000 a month becomes
Sixty instalments of ₹5,000 at 6.7% mature at ₹3,56,829: ₹3,00,000 deposited and ₹56,829 of interest. At ₹1,000 a month the maturity is ₹71,366; per ₹100 it is ₹7,136.58. The method is the Scheme’s own — quarterly compounding, each instalment counted from the month it is paid, simple interest within the quarter — and it reproduces the ₹6,969.67 the Scheme prints for the 5.8% era to the paisa, so the 6.7% figures are its figures rather than an approximation. A counter or app calculator may differ by a few rupees on how it treats the days inside a quarter. The RD calculator runs the same method for any instalment and rate.
The rebate nobody claims
The Scheme pays you to deposit early, and almost nobody does. Six or more instalments paid in advance in one calendar month earn a rebate of ₹10 per ₹100 of denomination; twelve or more earn ₹40 for every twelve, plus ₹10 for any remaining block of six or more. Advance deposits are allowed for any period up to the full five years.
The rebate is a fixed rupee sum, and read against the time the money is given up early it is a very good rate. Paying twelve instalments at once means the second is a month early, the third two months early and the twelfth eleven months early — 66 instalment-months in all, or 5.5 rupee-years per ₹100 of denomination. ₹40 on 5.5 rupee-years is 7.27% a year simple, above the RD’s own 6.7% and nearly double the 4.0% the same money would earn in a post office savings account while it waited for each due date. Six months in advance earns ₹10 on 1.25 rupee-years, which is 8%.
On a ₹5,000 account — fifty ₹100 denominations — a year’s instalments paid together earn ₹2,000, against about ₹1,100 the same ₹60,000 would earn in savings while waiting. Paying every year in advance across the five years earns ₹10,000, a sixth again on top of ₹56,829 of maturity interest.
Two cautions. The rebate is worth claiming with a year’s instalments, not with five. Someone holding the whole ₹3,00,000 today should not open an RD: a five-year time deposit at 7.5% pays ₹23,141 of interest a year — an effective 7.71% — handed out on each anniversary rather than left to compound, so ₹1,15,705 over five years and ₹4,15,705 in hand, against ₹3,66,829 for the RD plus every rebate, some ₹48,900 apart. And the Scheme bars premature closure “until the period for which the advance deposits have been made” is over, so a year paid ahead is a year in which the exit door is shut.
Missing a month, and borrowing before you break
The default fee
A missed instalment costs ₹1 for every ₹100 of denomination for each month it stays unpaid — 1% a month, or ₹50 a month on a ₹5,000 account — payable in one sum together with the arrears. Up to four defaults are survivable: the account holder may extend the maturity by the number of months missed and pay the defaulted instalments inside the extension, and an account in which the arrears are so paid “shall not be treated as discontinued”. The fifth default discontinues the account, and revival is allowed only within two months from the month of the fourth default. A discontinued account that is never revived is repaid at maturity in proportion to the maturity table for the deposits actually made; there is no route back to its rate.
The loan
Once twelve instalments have been paid and the account is a year old, up to 50% of the deposits made can be borrowed — ₹30,000 on a ₹5,000 account after its first year. India Post charges simple interest at two percentage points above the account’s rate, 8.7% on an account opened at 6.7%, repayable in one sum or in equal monthly instalments, and anything outstanding at closure is recovered from the amount paid out. For a temporary need it is the alternative to closing the account, because the account keeps compounding at 6.7% while the loan runs.
Closing it early costs the whole rate
Premature closure is not available at all in the first three years. From the third anniversary the account can be closed, but interest is then paid “at the rate applicable from time to time to the Post Office Savings Account” — 4.0% now — on any premature closure, whenever it falls. The 6.7% is not rebuilt for the completed years, as a bank would do; it is replaced outright.
Take a ₹5,000 account closed on the day the 36th instalment is paid. At 6.7% with quarterly compounding those 36 instalments would stand at ₹1,99,746, of which ₹19,746 is interest. At 4.0% simple interest, each instalment counted from its own month, they are worth ₹1,91,100. The closure gives up ₹8,646, and the closer the account is to maturity, the more it gives up. Someone who needs ₹30,000 in month 40 should take the loan.
Maturity, extension and the day after
The account matures on 60 deposits, five years from opening. Under the General Rules the maturity proceeds go by transfer to a post office savings account or by crossed cheque, and in cash only below the cash-payment limit set by the income-tax law.
Two things can happen after that instead of closure, each for up to five more years. The account can be continued with deposits equal to the original instalment, the default and rebate rules applying as before. Or the maturity amount can be retained without further deposits. In both cases the Scheme’s tables price complete years at the account’s rate and any broken period at the post office savings-account rate — a retained account closed after two years and seven months earns the RD rate on two years and 4.0% on seven months. The money is never re-booked into a fresh five-year account on its own.
One provision is unique to the scheme. Under its protected-savings paragraph, on the death of the account holder the nominee receives the full maturity value as if all 60 instalments had been paid, provided the account is at least two years old and not discontinued, the holder was between 18 and 55 at opening, the first 24 instalments were paid without default, and no loan was taken in the first 24 months. The benefit is capped at the maturity value of a ₹100-a-month account, so it is a token rather than insurance.
One rate for everyone, and then tax
There is no senior column. The notified table carries one RD rate, whereas a bank RD usually inherits the bank’s senior FD uplift, and the bank pages in this cluster print theirs. A depositor over 60 with a lump sum has a better instrument in the same building: the Senior Citizens Savings Scheme pays 8.2% for the quarter ending 30 September 2026 with a quarterly payout, up to ₹30 lakh. The RD is for accumulating; SCSS is for drawing.
Nothing in the Scheme or on India Post’s page attaches a deduction to the deposit. The section 80C deduction that other post office products carry under the old regime — the five-year time deposit, NSC, PPF, SCSS — does not exist for the RD, and exists for nothing under the new regime, which is the default.
Interest is income from other sources at your slab rate, taxable in the year it accrues even though nothing is paid out until maturity, so a five-year account is taxed across five or six financial years. The post office deducts tax at source once interest across your deposits there crosses ₹50,000 in a financial year, or ₹1,00,000 for a resident senior citizen, at 10% with PAN and 20% without. With nil liability and total income below the basic exemption, the declaration is Form 121, which replaced Forms 15G and 15H from 1 April 2026. The claim that recurring deposits escape TDS is out of date. At 6.7% before tax a depositor in the 30% slab keeps about 4.61% after cess. Our guide to tax on FD interest covers the thresholds and the accrual rule, and applies to an RD unchanged.
Where a bank RD fits, and the rest of the cluster
A bank RD is usually priced off the bank’s FD card for the same tenure, carries the bank’s senior uplift and sits inside the ₹5 lakh DICGC cover per depositor per bank, principal and interest together, alongside the same depositor’s FDs and savings. A post office RD is not a bank deposit, so DICGC cover does not apply to it and neither does the ₹5 lakh ceiling; the scheme is notified by the Central Government under the Government Savings Promotion Act, 1873. Our page on DICGC deposit insurance sets out what the cover does and does not do, and the FD rates hub is where the banks’ own cards are compared.
The bank RD pages: SBI, HDFC Bank, ICICI Bank, Axis Bank, Canara Bank, Punjab National Bank and Bank of Baroda. Each prints the bank’s own schedule, default fee, closure penalty and loan terms.
For a lump sum the post office alternatives are the National Savings Certificate at 7.7% and Kisan Vikas Patra at 7.5%, both compounding annually and paying at maturity.
Before you open
| If | What fits | Rate | The trap next to it |
|---|---|---|---|
| You can spare ₹100 to ₹5,000 a month and nothing more | The 5-year RD | 6.7% | The instalment cannot be changed; open a second account instead |
| You have a year’s instalments at hand | The same RD, twelve paid in advance | 6.7% plus ₹40 per ₹100 | No premature closure until the advance year is over |
| You have the whole five years’ money today | 5-year time deposit | 7.5% | An RD plus every rebate is about ₹48,900 behind on ₹3 lakh |
| You are over 60 with a lump sum | SCSS | 8.2% | ₹30 lakh ceiling; income, not accumulation |
| You may need the money inside three years | A bank RD, or the loan after twelve instalments | — | The post office RD cannot be closed at all before three years |
| You may need it in years three to five | The RD loan at 8.7% | 6.7% kept | Closing pays 4.0% on everything |
Open in the half of the month that puts the due date after pay day, set the instalment at what you can still pay in a bad month, and register the nomination on the opening form rather than later. Then read the rate printed on the passbook: it is the one you keep for five years.
Common questions
Does a senior citizen get a higher rate on a post office RD?
No. The notified table carries a single rate for the five-year recurring deposit — 6.7% for accounts opened between 1 October 2023 and 30 September 2026 — with no senior or super-senior column, unlike a bank RD, which usually inherits the bank's senior FD uplift. A depositor aged 60 or over with a lump sum is better served in the same post office by the Senior Citizens Savings Scheme at 8.2% for the quarter ending 30 September 2026, paid quarterly, up to ₹30 lakh. The RD suits monthly accumulation; SCSS suits income.
Can I pay a post office RD several months in advance, and is it worth it?
Yes, for any period up to the full five years, and the rebate is better than it looks. Six to eleven instalments paid together in one calendar month earn ₹10 per ₹100 of monthly denomination; twelve earn ₹40. On a ₹5,000 account a year paid ahead earns ₹2,000, which works out at 7.27% a year on the money advanced — more than the deposit's own 6.7% and well above the 4.0% savings rate. The catch is that premature closure is barred until the period covered by the advance is over.
What happens if I miss an instalment on a post office RD?
A default fee of ₹1 per ₹100 of denomination is charged for every month the instalment stays unpaid — ₹50 a month on a ₹5,000 account — and it is paid together with the arrears. Up to four defaults can be repaired by extending the maturity by the number of months missed. On the fifth default the account is treated as discontinued, and it can be revived only within two months from the month of the fourth default. An account that is never revived is repaid in proportion to the maturity table for the deposits actually made.
Can a post office RD be closed before five years?
Not in the first three years. From the third anniversary the account can be closed, but the interest on the whole balance is recalculated at the post office savings-account rate — 4.0% now — in place of 6.7%. Scheme paragraph 8 pays that rate on any premature closure, with no rebuild of the 6.7% for completed years, whenever the closure falls. On a ₹5,000 account closed at the 36th instalment that is roughly ₹8,646 of interest given up. After twelve instalments a loan of up to 50% of the deposits, at two percentage points over the account rate, is usually the cheaper route.
Does the post office RD get a section 80C deduction, and is the interest taxed?
No deduction, and yes it is taxed. The Scheme attaches no tax benefit to the deposit; the old-regime section 80C deduction belongs to the five-year time deposit, NSC, PPF and SCSS, not to the RD, and the new regime — the default — offers it on nothing. Interest is taxable at your slab rate in the year it accrues, and the post office deducts TDS at 10% once interest crosses ₹50,000 in a year, or ₹1,00,000 for a resident senior citizen. Form 121 is the nil-tax declaration since 1 April 2026.
Sources
Rates and rules on this page were read directly from the following sources on the dates shown. Figures change — if you are about to act on one, confirm it at the source.
- Post Office Saving Schemes — National Savings Recurring Deposit Account (RD) scheme panel
- Interest Rate on National Savings Schemes — quarterly table w.e.f. 1 April 2025 onwards (5 Year Recurring Deposit 6.7, Savings Account 4.0)
- National Savings Recurring Deposit Account Scheme — interest rate since inception (last row 1.10.2023 to 30.09.2026: 6.7)
- National Savings Recurring Deposit Scheme, 2019 — G.S.R. 918(E) of 12 December 2019, amended by G.S.R. 285(E) of 5 May 2020
- National Savings Recurring Deposit Account Scheme — features
- National Savings Time Deposit Account Scheme — interest rate since inception (1-, 2-, 3- and 5-year rows to 30.09.2026)
- Revision of interest rates for Small Savings Schemes — O.M. F.No.1/4/2019-NS dated 30.06.2026 (second quarter of FY 2026-27 unchanged)
- Guide to deposit insurance
- Income Tax Department e-Filing portal