Saving regularly is the first step toward building wealth—and the Indian Post Office offers several schemes to help you do just that. One such claim that’s been making headlines is: “Invest just ₹5,000 every month and receive ₹8 lakh in return.” Sounds promising, right? But how true is this, and how exactly can you achieve such returns?
In this article, we break down how the Post Office Recurring Deposit (RD) and other small savings schemes work, whether you can really turn ₹5,000 monthly into ₹8 lakh, and what options may work better for you.
Post Office Scheme: Save ₹5,000 Monthly and Get ₹8 Lakh
| Feature | Details |
|---|---|
| Monthly Investment | ₹5,000 |
| Scheme Type | Post Office Recurring Deposit (RD) |
| Current RD Interest Rate (2024–25) | 6.7% p.a., compounded quarterly |
| Investment Duration for ₹8 Lakh | 10 years or more, depending on scheme used |
| Alternative Option | Combine RD + POMIS (7.4%) for better results |
| Official RD Details | India Post |
While the statement “Save ₹5,000 every month and get ₹8 lakh” is true, it comes with a time commitment of 10 years under the Post Office RD scheme. If you want to reach that figure faster or diversify your savings, combining RD with POMIS or other small savings schemes can be a smart move.
What Is the Post Office Recurring Deposit (RD) Scheme?
The Post Office Scheme is a government-backed savings scheme that allows you to invest a fixed amount every month—starting from as little as ₹100. It’s ideal for people looking for a safe, low-risk way to build wealth over time.
Key Features of Post Office RD
- Minimum Deposit: ₹100 (in multiples of ₹10)
- Maximum Deposit: No upper limit
- Tenure: 5 years (can be extended)
- Interest Rate: 6.7% p.a. (as of April 2024), compounded quarterly
- Premature Withdrawal: Allowed after 3 years, but with penalty
see also: Your Wife Can Make You a Millionaire in Just 20 Years
Can You Really Turn ₹5,000 Per Month Into ₹8 Lakh?
Let’s do the math.
Scenario 1: 5-Year RD with ₹5,000/month
- Total Investment: ₹5,000 × 60 months = ₹3,00,000
- Interest Earned: Approx. ₹56,830
- Maturity Value: ₹3,56,830
Clearly, a 5-year RD won’t give you ₹8 lakh.
Scenario 2: Extend RD for 10 Years
Let’s assume you continue to invest ₹5,000 every month for 10 years.
- Total Investment: ₹5,000 × 120 months = ₹6,00,000
- Estimated Interest Earned: Approx. ₹2,32,000
- Maturity Value: ₹8,32,000
Yes, it’s possible to reach ₹8 lakh—but only if you invest continuously for 10 years.
Pro Tip: Always calculate maturity using an RD calculator like Scripbox RD Calculator.
Alternative Ways to Reach ₹8 Lakh with Post Office Schemes
1. Use Post Office Monthly Income Scheme (POMIS)
POMIS offers monthly interest payouts at 7.4% p.a. for a lock-in period of 5 years. Here’s how you can use it:
- Invest ₹9 lakh in POMIS
- Monthly Interest: ₹5,550
- Reinvest this ₹5,550/month in RD
- This way, your RD earns compound interest while your principal stays safe
2. Combine POMIS + RD Strategy
| Scheme | Investment | Monthly Income | Tenure |
|---|---|---|---|
| POMIS | ₹8–9 lakh | ₹4,933 – ₹5,550 | 5 years |
| RD (reinvest monthly income) | ₹5,000/month | Grows to ₹3.5+ lakh | 5 years |
Outcome: After 5 years, you’ll still have your ₹8 lakh in POMIS + additional ₹3.5 lakh from RD.
Why Choose Post Office Schemes?
Post Office schemes like RD and POMIS are preferred for:
- Guaranteed returns (backed by the Government of India)
- Easy accessibility (available across 1.5 lakh+ branches)
- Low entry barrier (start with ₹100 or ₹500)
- Flexible reinvestment options
How to Open a Post Office RD Account
Here’s a step-by-step guide:
Step 1: Visit Your Nearest Post Office
Go to the nearest India Post branch. Carry:
- Aadhaar Card
- PAN Card
- Passport-size photos
- Address proof
Step 2: Fill the RD Account Form
Ask for the RD account opening form, fill it out, and submit with the documents.
Step 3: Choose Deposit Amount & Tenure
You can start with ₹100/month, but choose ₹5,000/month to target ₹8 lakh.
Step 4: Link Your Post Office Savings Account (POSA)
Link it for automatic deductions.
Step 5: Collect Passbook
You’ll receive an RD passbook showing all contributions and accrued interest.
Taxation on Post Office RD
- Interest earned on Post Office Scheme is taxable
- It falls under “Income from Other Sources” and is added to your annual income
- No TDS is deducted by the Post Office, so you need to report it while filing ITR
Tip: If your income is below the taxable limit, no tax is applicable.
What Are the Risks Involved?
Post Office RD is considered risk-free, but here are a few limitations:
- Returns are moderate (6.7% is lower than inflation in some years)
- No tax benefit under Section 80C
- Premature withdrawal penalty
Best Use-Cases for This Scheme
This scheme is ideal for:
- Salaried individuals who want to automate monthly savings
- Retirees looking for safe, long-term investments
- Parents building a fund for child’s education
- Small business owners planning for future expenses
see also: Post Office FD: If You Deposit ₹2,00,000 for 24 Months
Post Office Scheme FAQs
1. Can I invest more than ₹5,000 in Post Office RD?
Yes, there is no upper limit. You can invest ₹10,000 or ₹20,000/month if you wish.
2. What happens if I miss an RD payment?
A small penalty of ₹1 for every ₹100/month is charged for late payments. You can continue the account after paying the penalty.
3. Is there any tax deduction for RD investments?
No. RD doesn’t offer tax benefits under Section 80C.
4. Can NRIs invest in Post Office RD?
No. Only resident Indians are allowed to invest in Post Office RD.
5. Is the interest rate fixed?
Yes. The rate is fixed at the time of investment, but new RDs will get the updated rate when declared quarterly by the government.
