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Post Office RD Account Details: Recurring Account Details

Post office RD account what is it? Recurring Deposit (RD) scheme of the post office is one of the nine (9) small savings plans supported by the Indian government. This scheme serves as medium-term investment options; where investors must keep their deposits active for at least 5 years.

Being risk-free, the system offers prudent and inexperienced investors the opportunity to park a fixed amount of funds at regular intervals. Depositors earn interest on their deposit, which is made up quarterly.

Post Office RD Account Details

Post office RD account details 

In addition to the development of courier services, post offices offer their customers various financial services in the form of savings and life insurance plans.

The savings plan extended by post offices is a risk-free investment option. The recurring postal deposit is part of these extended savings plans for the general public.

Typically, a recurring deposit (RD) post office scheme is one of the most popular savings alternatives to traditional fixed deposits and other long-term programs offered by post offices.

Who are suitable for the post office RD account scheme?

The security of investing in an RD account at the post office and the ability to earn compound interest on it make this system feasible. People who earn a fixed income but wish to generate wealth over time can consider the post office recurring deposit plan effective and adequate. So investing under this plan can benefit the depositor.

Also Read: Difference between Zip and Postal Code

Who can open an RD account at the post office?

People who wish to open an recurring deposit account at the post office must meet these criteria:

  • Citizens of India over the age of 18.
  • Minors who are above 10 years of age.
  • Custodian or parents who wish to open and manage a minor’s account on their behalf.

Indian citizens who are above 18 years of age would be considered eligible to manage an RD account at the post office, individually or jointly.

However, a minor over the age of 10 can manage their account in collaboration with their custodian. 

What are the main characteristics of an RD scheme of the post office?

Post Office RD scheme features make the savings plan an attractive investment option.

Main features of the RD scheme of the post office:

Insignificant Deposit Limitation

People having an RD account must deposit a minimum of Rs.10 each month. There is no upper limit on the amount of investment that can be made. People can open an RD account at the post office by check or cash.


RD scheme offers depositors a high rate of interest. The sum of interest is capitalized quarterly and allows people to generate better income. Thus depositors can generate a good amount of interest on their deposits. 


Account-holders can manage their account individually or together. In the case of a joint account, two adults can jointly manage their RD account at the post office. However, if one of the account holders is above the age of 10 years they  can manage the account in association with their custodian. So depositors can manage their accounts individually or jointly.

 Nomination facility

The RD scheme offers the possibility of taking advantage of a nomination facility. An account holder can opt for such a facility at the time of opening an RD account at the post office. They may also decide to go easy with nomination after opening their account under this scheme.


People having an RD account can take advantage of the discount facility on their advance deposits. But this facility is limited to 6 installments only. Thus account holders can avail the rebate under this scheme.

Ease of transfer

Recurring deposit (RD) account holders can easily transfer funds from their RD at the post office. They also have the right to open any account number at various post offices.

Withdrawal facility

The recurring deposit scheme allows people to withdraw their deposits without any problem. After one year of the opening of the account, they can withdraw up to 50% of the deposit amount.

The interest rate of post office RD account

The RD scheme interest rate offered in is 7.2% per annum. This interest rate makes it one of the most popular investment options.

Besides, compound interest extended each quarter is a highly desired benefit of the system. The scheme makes it sure that people have a powerful aggregation available to them by the time when the scheme matures.

This characteristic would directly contribute to the creation of wealth and would ensure financial stability for the following years.

How are taxes applied to a post office RD account?

Post office RD account falls under the tax exemption in section 80C. People can claim up to Rs. 1.5 Lakh according to the annual tax exemption under this section.

However, the interest generated by the post office under the RD scheme is subject to tax.

RD account holders have to pay an amount of tax based on their income tax slab. Besides, any interest which is more than Rs. 10,000 would be responsible for a TDS (Tax Deducted at Source). RD account holders having active PAN would pay TDS at a rate of 10%, while those who are without active PAN would pay TDS but at a rate of 20%.

Rebate facility on Post Office recurring deposit?

Post office offered rebate (discount) facility to RD account holders to encourage them to deposit money into their accounts on time.

However, in the case of the post office RD scheme, account holders can avail rebate on their deposits which have been invested at least 6 months in advance. Besides, these rebates are available in the form of a deposit of at least 6 installments.

Premature withdrawal facility on Recurring Deposit

RD account holders can access their recurring postal deposits and finance their urgent needs. But up to 50% of the available funds can be withdrawn from this account only one year after opening. A simple interest rate would apply to withdrawn funds.

The post office recurring deposit scheme is a feasible investment option for people looking for a way to save money in the short term.

However, short-term mutual funds can offer a much higher return but with some risks. Short-term mutual funds are better equipped to allow people to achieve their short-term financial goals with strategic market-related investments.

When it comes to choosing the best mutual funds for short-term investments, take advantage of professional assistance to get the best possible returns on your investment, and create a larger fund in less time.

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