Post Office Recurring Deposit: Rules, Loan and Premature Closure

A post office RD is a five-year savings account in which you deposit the same amount every month, starting at ₹100. Accounts opened from 1 July to 30 September 2026 earn 6.7% a year, compounded quarterly, and that rate holds for the full term. You can borrow up to half your deposits after one year and close the account early after three years.

Key facts

Deposit amount and due dates

Your first deposit sets the denomination of the account, and every later deposit must match it. You cannot raise or cut the monthly amount, but you may hold any number of RD accounts, so a second account is the way to save more.

The due date depends on when you opened the account:

• Opened between the 1st and 15th: pay each instalment by the 15th of the month.
• Opened between the 16th and the month end: pay by the last working day of the month.

You can also pay six or more instalments in advance, up to five years’ worth. The scheme gives a rebate of ₹10 per ₹100 denomination for 6 to 11 advance deposits, and ₹40 for every 12. An account paid in advance cannot be closed early until the advance period is over.

Interest rate and maturity value

The Finance Ministry reviews small savings rates each quarter. The National Savings Institute lists the RD rate at 6.7% from 1 October 2023 to 30 September 2026. Rates for October to December 2026 are due around the end of September; our small savings rates page carries the latest quarter.

The maturity amount in the scheme is fixed by the date you opened the account, so later rate changes do not alter it. At 6.7%, the maturity value works out as follows:

*Our calculation at 6.7% with quarterly compounding, assuming every instalment is paid on time. The post office’s figure may differ by a rupee or two because of rounding. You can try other amounts in the RD calculator.

Missed instalments and revival

Missing a month does not close the account straight away. Paragraph 6 of the scheme sets these rules:

A discontinued account that is not revived still pays out at the end of the term, in proportion to what you deposited.

Loan against a post office RD

Once the account has run for at least one year and you have made 12 deposits, you can take a loan of up to 50% of the balance. Advance deposits count towards that balance.

1. Check that the account is not discontinued.
2. Submit Form-5 at your post office with your passbook, or request the loan through India Post internet banking if you have it.
3. Receive the loan, in a multiple of ₹10.
4. Repay it in one lump sum or in equal monthly instalments, along with your RD deposits.

Interest is simple interest at 2 percentage points above your RD rate. On an account earning 6.7%, that makes 8.7%. If you repay in instalments, the total interest is due with the last instalment. Any amount still owed when the account closes is deducted from the payout.

Premature closure and extension

Closing before five years

You can close the account after three years by submitting Form-2. You then get interest at the Post Office Savings Account rate, currently 4%, instead of 6.7%. India Post says the savings rate applies even if you close one day before maturity. The scheme has no early-closure option before three years. If the account holder dies, the nominee or legal heir can claim the balance or continue the account.

After maturity

At the end of five years you have three choices:

How to open an RD account

1. Visit any post office that handles savings bank work, or log in to India Post internet banking if you already hold a post office savings account.
2. Fill in Form-1, the account opening form, and add a nominee.
3. Submit Aadhaar and PAN. Without PAN, you can give Form 60, but PAN is needed once deposits cross the limits in the post office rules.
4. Pay the first instalment, which fixes the monthly amount. Keep the passbook for later deposits and loans.

Internet banking lets you open an RD, pay instalments, take an RD loan and repay it without visiting a branch.

Tax on RD interest

RD interest is taxable as income at your slab rate. The National Savings Institute’s scheme list does not show the RD as eligible for the deduction available on the 5-year time deposit, so your monthly deposits do not reduce your taxable income.

For tax year 2026-27, TDS on interest falls under Section 393 of the Income-tax Act, 2025. The threshold for interest from a bank, co-operative bank or post office is ₹50,000 a year, or ₹1,00,000 for senior citizens. If your total income is below the taxable limit, you can give the payer a declaration in Form 121, which replaced Forms 15G and 15H from 1 April 2026. The threshold counts all your interest from that payer in the year, not just the RD.

If you want a lump-sum deposit instead, see our guide to the post office time deposit. To compare the post office rate with bank RDs, see recurring deposit rates.

Frequently asked questions

What is the post office RD interest rate now?

6.7% a year, compounded quarterly, for accounts opened from 1 July to 30 September 2026. The rate at opening applies for the full five years.

What is the minimum amount for a post office RD?

₹100 a month, and any higher amount in multiples of ₹10. There is no maximum.

Can I change the monthly RD amount later?

No. Every deposit must equal the first one. Open another RD account if you want to save more.

Can I close a post office RD before 3 years?

The scheme does not provide for it; the nominee can claim only if the holder dies. After three years you can close it, but interest is paid at the savings account rate of 4%.

How much loan can I take on a post office RD?

Up to 50% of your deposits, after the account has run for a year with 12 deposits made. Interest is 2 percentage points above the RD rate.

What happens if I miss RD instalments?

With up to four missed deposits you can extend the term and pay them later with a fee of ₹1 per ₹100 per month. After more than four, the account is discontinued and can be revived only within two months.

Is post office RD interest tax-free?

No. The interest is taxable at your slab rate, and the RD is not listed among the post office schemes that qualify for a tax deduction.

Sources

• National Savings Recurring Deposit Scheme, 2019 (full text) — National Savings Institute (checked 17 Sep 2026)
• Recurring Deposit interest rate since inception — National Savings Institute (checked 17 Sep 2026)
• Post Office Savings Account interest rate — National Savings Institute (checked 17 Sep 2026)
• National Savings Schemes at a glance — National Savings Institute (checked 17 Sep 2026)
• Saving Schemes: RD account rules and rates for July–September 2026 — India Post (checked 17 Sep 2026)
• Revision of interest rates for small savings schemes — Department of Economic Affairs (checked 17 Sep 2026)
• Section 393: TDS thresholds — Income Tax Department (checked 17 Sep 2026)
• Income tax forms: Form No. 121 — Income Tax Department e-Filing portal (checked 17 Sep 2026)