RD Calculator
Recurring Deposit Maturity & Interest
| Year | Deposited | Interest | Balance |
|---|
What is a Recurring Deposit (RD)?
A Recurring Deposit (RD) is a special type of term deposit offered by banks which allows people with regular incomes to deposit a fixed amount every month into their RD account and earn interest at the rate applicable to Fixed Deposits (FD).
It is similar to making an SIP in a bank, but with zero risk and guaranteed returns.
RD vs SIP: Which is Better?
This is the most common confusion. Here is the clear difference:
| Feature | Recurring Deposit (RD) | SIP (Mutual Funds) |
|---|---|---|
| Returns | 6.5% – 8% (Fixed) | 12% – 15% (Variable) |
| Risk | Zero Risk | Market Risk |
| Taxation | Interest is Taxable | LTCG Tax (Lower) |
How is RD Interest Calculated?
Most Indian banks (like SBI, HDFC, ICICI) use the Quarterly Compounding formula. This means even though you deposit money monthly, the interest is calculated and added to your principal every 3 months.
Note: Post Office RDs are slightly different; they usually calculate interest annually or quarterly but have a 5-year lock-in.
Taxation on RD (TDS Rules)
Just like FD, the interest earned on RD is fully taxable. Banks will deduct 10% TDS if the interest income exceeds:
- ₹40,000 for regular citizens.
- ₹50,000 for senior citizens.
Can I break my RD before maturity?
Yes, you can close your RD prematurely. However, the bank will deduct a penalty (usually 1%) from the interest rate applicable for the period the deposit remained with the bank.
What happens if I miss an RD installment?
If you miss a monthly payment, the bank may charge a penalty (e.g., ₹1.50 per ₹100 per month). If you miss multiple installments, the bank might close the account prematurely.