Post Office RD Scheme Interest Rate for 5 Years (2025)

Most people in India dream of building a habit of saving without putting their money at risk. But let’s be honest, saving consistently isn’t always easy. Markets go up and down, bank interest rates fluctuate, and sometimes, the fear of losing money holds people back from investing.

That’s where the Post Office Recurring Deposit (RD) scheme steps in. A simple, safe, and government-backed savings option, it lets you deposit a fixed amount every month and earn guaranteed returns. Among all the options, the post office RD scheme interest rate for 5 years is one of the most searched in 2025, because it offers a stable way to grow money with zero risk.

If you’re someone who wants steady returns, tax-saving benefits, and a disciplined saving option, this article will give you everything you need to know.

What is a Post Office RD Scheme?

A Post Office Recurring Deposit (RD) account is a savings scheme offered by India Post where you deposit a fixed amount monthly. The interest is compounded quarterly, which means your money grows faster than a simple savings account.

• Lock-in period: Minimum 5 years
  
• Deposit amount: As low as ₹100 per month (no maximum limit)
  
• Compounding: Quarterly
  
• Backed by: Government of India (safe and secure)
  

In short, it’s like a “small savings piggy bank” that builds into a large fund over time.

Post Office RD Scheme Interest Rate for 5 Years (2025 Update)

The Government of India reviews small savings interest rates every quarter. For January – March 2025, the official post office recurring deposit interest rate is:

Tenure	Interest Rate (p.a.)	Compounding
5 Years RD	6.7% per annum	Quarterly

This means if you invest every month for 5 years, your savings will grow steadily at 6.7% interest, guaranteed by the government.

How Much Can You Earn? (Example Calculation)

Let’s say you invest ₹2,000 per month in a 5-year Post Office RD account:

• Monthly Deposit: ₹2,000
  
• Tenure: 5 years (60 months)
  
• Interest Rate: 6.7% (compounded quarterly)
  

Maturity Value: ~ ₹1,46,500

So, your total investment of ₹1,20,000 turns into nearly ₹1.46 lakh. That’s an extra ₹26,500 earned without any risk.

If you invest higher, say ₹5,000 or ₹10,000 monthly, the returns grow proportionally.

Interest Rate Features for Post Office RD Accounts (2025)

• Fixed Returns: 6.7% guaranteed for 5 years.
  
• Minimum Deposit: ₹100/month, making it accessible for everyone.
  
• Compounding Effect: Interest is calculated quarterly, giving better growth than simple interest.
  
• Premature Closure: Allowed after 3 years with reduced interest.
  
• Loan Facility: You can borrow up to 50% of your balance after 12 installments.
  
• Joint Account Option: Up to 3 adults can open jointly.
  

Benefits of Investing in Post Office 5-Year RD

1. Government Guarantee – Unlike private investment schemes, this is 100% backed by the Government of India.
   
2. Low Risk – No market fluctuation risk, unlike mutual funds or stocks.
   
3. Discipline in Saving – A fixed monthly deposit builds financial discipline.
   
4. Suitable for All Ages – Ideal for salaried professionals, homemakers, or senior citizens.
   
5. Loan Facility – Emergencies can be handled without breaking the RD.
   

Which is better, the Post Office RD or the Bank RD?

Feature	Post Office RD	Bank RD (Average PSU/Private)
Interest Rate	6.7% (fixed)	6.25% – 7% (varies by bank)
Safety	Government-backed	Covered by DICGC (up to ₹5 lakh)
Minimum Deposit	₹100/month	₹500 – ₹1,000/month
Tenure	5 years	6 months – 10 years

If safety and fixed returns are your priority, Post Office RD is the safer bet. If you’re chasing slightly higher rates, some private banks may offer better RD rates.

Taxation Rules on Post Office 5-Year RD

• The amount invested in a post office RD is not eligible for Section 80C deduction.
  
• The interest earned, however, is subject to taxation based on your income bracket.
  
• TDS is not deducted automatically, but you must declare it while filing ITR.
  

(Tip: If tax-saving is your main goal, you may explore Post Office 5-Year FD, NSC, or PPF.)

Who Should Invest in Post Office RD Scheme for 5 Years?

• Salaried Employees – who want a disciplined monthly saving option.
  
• Parents – looking to save for children’s education or future.
  
• Retired Persons – who prefer safety and assured income.
  
• First-time Investors – who want to start with a small, safe scheme.
  

How to Open a Post Office RD Account: Know Process

1. Visit your nearest Post Office branch.
   
2. Fill out the RD Account Opening Form.
   
3. Submit KYC documents (Aadhaar, PAN, Address Proof).
   
4. Decide your monthly installment (minimum ₹100).
   
5. Make the first deposit via cash/cheque/online.
   
6. Collect your RD Passbook as proof of investment.
   

FAQs – Post Office RD Scheme Interest Rate for 5 Years

Q1. What is the current interest rate on Post Office RD for 5 years?
  As of January 2025, it’s 6.7% per annum (compounded quarterly).

Q2. Can I withdraw money before 5 years?
  Yes, but only after 3 years, and you’ll earn lower interest.

Q3. Does Post Office RD qualify for tax exemption?
  No, the investment doesn’t qualify under Section 80C, unlike FD or PPF.

Q4. Is Post Office RD better than Bank RD?
  For safety and guaranteed fixed rates, yes. But some banks may offer slightly higher interest.

Q5. Can I open a Post Office RD account online?
  Yes, if you have an India Post savings account with internet banking enabled.

Conclusion

If you’re looking for a safe, disciplined, and government-backed savings option, the post office RD scheme interest rate for 5 years makes perfect sense in 2025. With a steady 6.7% per annum return, small monthly deposits can grow into a substantial fund over time.

While it may not beat inflation drastically or provide tax-saving benefits, its safety, guaranteed growth, and accessibility make it an excellent choice for risk-averse investors.

 If you want stability in your portfolio, open a Post Office RD account today and watch your small monthly savings turn into a secure future fund.