Want to save for the future? Learn how to claim tax deductions on your National Savings Recurring Deposit

The Post Office Recurring Deposit, also called the National Savings Recurring Deposit, is a 5-year disciplined saving scheme with quarterly compounded interest. It does not qualify for Section 80C deduction because it is not listed among eligible 80C instruments. The interest is fully taxable as Income from Other Sources at slab rate, with no TDS at source. Senior citizens can claim Section 80TTB deduction up to ₹50,000 on aggregate interest under the old tax regime.

Priyanka Wadhera

Published: 3 Feb 2023

Updated: 16 May 2026

3 min read

The Post Office Recurring Deposit (RD) — often called the National Savings Recurring Deposit — is one of the most accessible disciplined saving vehicles in India. Operated by India Post with a low minimum monthly deposit, it suits salaried savers, small business owners, and homemakers looking to build a corpus through monthly outlays. For FY 2026-27, it is critical to understand that the Post Office RD does not qualify for Section 80C deduction, and the interest is taxable. Here is the complete tax-and-compliance picture.

Features of the Post Office Recurring Deposit

Tenure: 5 years, with the option to extend for another 5 years.
Minimum monthly deposit: ₹100; no upper limit, in multiples of ₹10.
Interest rate: notified quarterly by the Ministry of Finance under the small savings scheme review.
Compounding: quarterly.
Eligible holders: individuals (single or joint up to three adults), minors through guardian, body of two or more individuals.
Loan facility: up to 50 per cent of the balance after one year of opening, repayable in a lump sum or instalments.
Premature closure: allowed after three years from the date of opening, with savings account interest applicable for the remaining tenure.

Why Post Office RD does not qualify for Section 80C

Section 80C of the Income-tax Act specifies a closed list of eligible instruments — PPF, NSC, ELSS, life insurance premium, ULIPs, principal repayment on housing loan, Sukanya Samriddhi, SCSS, and 5-year tax-saver bank FDs. The Post Office Recurring Deposit is not listed. Therefore, the monthly contributions to a Post Office RD do not reduce your taxable income. Many small investors mistakenly believe RD is 80C-eligible because it is a post office product; check the schedule before claiming.

Tax treatment of interest

Interest earned on Post Office RD is taxable as Income from Other Sources at the depositor's slab rate. India Post does not deduct TDS on Post Office RD interest, but Section 194A applies to bank-issued RDs above the threshold. The depositor must self-assess and pay advance tax in four instalments if the total tax liability exceeds ₹10,000 in the financial year. Failure attracts interest under Sections 234B and 234C.

Section 80TTB for senior citizens

Senior citizens aged 60 and above can claim deduction under Section 80TTB up to ₹50,000 per year on aggregate interest from deposits with banks, post offices, and co-operative banks. This includes Post Office RD interest. The deduction is available only under the old tax regime. Section 80TTA, which is available to non-seniors for savings bank interest up to ₹10,000, does not cover RD interest at all.

Reporting in the ITR

Track the annual interest accrued on the RD using the India Post passbook or annual statement.
Report the aggregate interest under Income from Other Sources in the ITR.
Senior citizens claim Section 80TTB up to ₹50,000 under the old regime.
Reconcile entries with the AIS pre-filled data; raise feedback if the AIS shows a higher figure than your records.
Pay advance tax where total liability exceeds ₹10,000.
Retain the RD passbook for assessment records.

Comparing Post Office RD with alternatives

If your goal is disciplined monthly saving with tax efficiency, consider alternatives: PPF (monthly contribution within ₹1.5 lakh annual cap, 80C-eligible, EEE), SIP in ELSS (80C-eligible, equity exposure, 3-year lock-in), or 5-year tax-saver bank FDs (80C-eligible but TDS applies). Post Office RD wins on sovereign comfort and ease of access at any post office; it loses on tax efficiency. For senior citizens, the combination of SCSS plus a small RD often outperforms a pure RD strategy.

Conclusion

The Post Office Recurring Deposit is a simple, safe, and sovereign-backed monthly saving tool — but it is not a tax-saving instrument. Use it to inculcate discipline and as a parking vehicle, not as a Section 80C plank. Plan your overall tax mix with PPF, ELSS, SCSS, or SSY for 80C, and use RDs to supplement liquidity and habit-formation in your savings architecture.

Frequently Asked Questions

Is Post Office Recurring Deposit eligible for Section 80C deduction?

No. The Post Office Recurring Deposit is not listed among the specified instruments eligible for Section 80C deduction. Monthly contributions do not reduce taxable income. For 80C, consider PPF, NSC, ELSS, life insurance premium, SCSS, SSY, or 5-year tax-saver bank FDs under the old tax regime.

Is TDS deducted on Post Office RD interest?

India Post does not deduct TDS on Post Office Recurring Deposit interest. However, the depositor must self-assess and report the interest under Income from Other Sources. Advance tax in four instalments is required if the total tax liability exceeds ₹10,000 in the financial year.

Can senior citizens claim deduction on Post Office RD interest?

Yes. Senior citizens aged 60 and above can claim Section 80TTB deduction up to ₹50,000 per year on aggregate interest income from deposits with banks, post offices, and co-operative banks, including the Post Office Recurring Deposit. This benefit is available only under the old tax regime.

What is the minimum deposit in Post Office RD?

The minimum monthly deposit in a Post Office Recurring Deposit is ₹100, and additional deposits must be in multiples of ₹10. There is no maximum limit on the monthly deposit amount. The standard tenure is 5 years, extendable by another 5 years, with the option of premature closure after 3 years.