RD Calculator India — Recurring Deposit Calculator 2026

Q: Is RD interest taxable? What about TDS?

Yes, RD interest is fully taxable at your income tax slab rate under Income from Other Sources. Banks deduct TDS at 10% if annual interest from all deposits exceeds ₹40,000 (₹50,000 for senior citizens). Submit Form 15G/15H to avoid TDS if total income is below the basic exemption limit. Post Office RDs do not deduct TDS, but interest must still be declared in ITR.

Q: Is RD eligible for Section 80C tax deduction?

Bank RDs are NOT eligible for Section 80C deduction. Only Post Office 5-year Recurring Deposits qualify for 80C deduction up to ₹1.5 lakh per year. However, even for Post Office RDs, the interest earned is still taxable at your slab rate. For tax-saving deposits, consider tax-saving FDs (5-year lock-in) or PPF (tax-free interest).

Q: What is the penalty for premature RD withdrawal?

Most banks allow premature closure of RDs with a penalty of 0.5% to 1% on the applicable interest rate. The bank recalculates interest at the rate for the actual period held, minus the penalty. Post Office 5-year RDs cannot be withdrawn before 3 years; after 3 years, premature withdrawal is allowed at reduced interest.

Q: RD vs FD: which is better for savings?

Both RD and FD are guaranteed, low-risk bank deposits. FD requires a one-time lump sum while RD accepts monthly instalments. Choose RD if you save monthly from salary. Choose FD if you have idle cash to lock in. FD rates may be marginally higher. Both are DICGC-insured up to ₹5 lakh per depositor per bank.

Calculate your Recurring Deposit maturity value with quarterly compounding, compare RD vs SIP returns side-by-side, and see the exact tax impact on your RD interest. Updated for FY 2025-26 with latest SBI, HDFC, and Post Office RD rates.

Calculate how much your Recurring Deposit will grow to at maturity

Monthly RD deposit

₹

Fixed amount deposited every month into your RD

Interest rate (p.a.)

SBI: 6.25-6.75%, HDFC: 5.50-7.00%, Post Office: 6.70%

RD tenure

years

Typical RD tenure: 6 months to 10 years

Senior citizen (60+)

Most banks offer +0.50% higher rate for senior citizens

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How to Use This Calculator

RD Maturity tab

Enter your monthly RD deposit, interest rate, and tenure. The calculator shows your total amount deposited, interest earned with quarterly compounding, and the maturity value. Toggle the senior citizen option to automatically add the 0.50% bonus rate offered by most banks.

RD vs SIP tab

Enter the same monthly amount for both instruments. The calculator compares a guaranteed RD return (e.g. 7%) against a market-linked SIP return (e.g. 12%). See the side-by-side maturity values, the difference, and the opportunity cost of choosing RD over SIP. Use this to decide the right mix for your risk profile.

Tax on RD tab

Enter your total RD interest earned and select your income tax slab. The calculator computes your tax payable, checks whether TDS applies (above ₹40,000 for general citizens, ₹50,000 for seniors), and shows your effective post-tax return. Useful for understanding the real yield of your RD after tax.

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The Formula

Recurring Deposit interest is compounded quarterly. Since you deposit monthly but compounding happens every quarter, the calculation sums the future value of each monthly instalment:

RD Maturity Value (Quarterly Compounding):
M = R × [(1 + i)ⁿ − 1] / [1 − (1 + i)^−1/3]

Where:
R = Monthly deposit amount
i = Quarterly interest rate (annual rate / 400)
n = Number of quarters (tenure in years × 4)
M = Maturity value

Simplified per-instalment method:
Each monthly deposit of ₹R earns compound interest for the remaining quarters, plus simple interest for any partial quarter. The maturity value is the sum of all such future values.

Post-tax effective return:
Effective Rate = RD Rate × (1 − Tax Slab Rate)
Example: 7% RD at 30% slab → 7% × (1 − 0.30) = 4.90% effective

Banks calculate interest from the date of each monthly instalment, compounded at the end of each calendar quarter (March, June, September, December). The total maturity amount is the sum of all deposits plus accumulated compound interest.

Example

Rahul — Pune IT professional, ₹10,000/month RD for 5 years

Rahul is 32, works at a software company in Pune, and wants to save ₹10,000/month in a bank RD at 7% for a down payment on a flat. He also wants to understand how much more he could earn via SIP and what tax he will owe on the interest.

Step 1: RD Maturity calculation

Monthly deposit₹10,000

Interest rate7.0% p.a.

Tenure5 years (60 months, 20 quarters)

Quarterly rate (i)7.0 / 400 = 1.75%

Step 2: RD Result

Total deposited₹6,00,000

Interest earned~₹1,16,000

Maturity value~₹7,16,000

Return on deposits~19.3%

Step 3: RD vs SIP comparison

RD maturity (7%, guaranteed)~₹7,16,000

SIP corpus (12%, estimated)~₹8,25,000

SIP earns more by~₹1,09,000

Step 4: Tax on RD interest

Interest earned~₹1,16,000

Tax slab (30%)₹34,800

Post-tax interest~₹81,200

Effective post-tax rate~4.9% p.a.

Rahul's ₹10,000/month RD at 7% grows to ~₹7.16 lakh in 5 years. A SIP at 12% would yield ~₹8.25 lakh but with market risk. After 30% tax, his effective RD return drops to 4.9% — he may consider mixing RD with PPF (tax-free) and SIP for better overall returns.

FAQ

What is a Recurring Deposit (RD) and how does it work? ▼

A Recurring Deposit (RD) is a savings product offered by banks and the Post Office where you deposit a fixed amount every month for a pre-decided tenure (6 months to 10 years). The bank pays a guaranteed interest rate, compounded quarterly. At maturity, you receive your total deposits plus accumulated interest. RDs are ideal for salaried individuals who want to save a fixed amount monthly without market risk. You can open an RD at any bank branch, online banking, or via Post Office with as little as ₹100/month. The interest rate is fixed at the time of opening and does not change during the tenure.

Is RD interest taxable? What about TDS? ▼

Yes, RD interest is fully taxable at your income tax slab rate under "Income from Other Sources." Banks deduct TDS at 10% if your annual interest from all deposits (FD + RD combined) exceeds ₹40,000 (₹50,000 for senior citizens aged 60+). If you don't provide PAN, TDS is 20%. To avoid TDS when your total income is below the basic exemption limit, submit Form 15G (general citizens below 60) or Form 15H (senior citizens 60+) at the beginning of each financial year. Note: Post Office RDs do not deduct TDS, but the interest is still taxable and must be declared in your ITR.

Is RD eligible for Section 80C tax deduction? ▼

Bank RDs are NOT eligible for Section 80C deduction — this is a common misconception. Only Post Office 5-year Recurring Deposits (National Savings RD scheme) qualify for 80C deduction up to ₹1.5 lakh per year. However, even for Post Office 5-year RDs, the interest earned is still taxable at your slab rate. If you are looking for a deposit-based 80C investment, consider a tax-saving FD (5-year lock-in, 80C eligible) or PPF (15-year lock-in, 80C eligible, and interest is completely tax-free under EEE status).

What is the penalty for premature RD withdrawal? ▼

Most banks allow premature closure of RDs with a penalty of 0.5% to 1% on the applicable interest rate. The bank recalculates interest at the rate applicable for the actual period held, minus the penalty. For example, if you close a 5-year RD after 2 years, you get the 2-year RD rate minus the penalty. Some banks also charge a flat fee. Post Office 5-year RDs (tax-saving) cannot be withdrawn before 3 years. After 3 years, premature withdrawal is allowed with reduced interest (Post Office savings account rate). Always check your bank's specific premature closure terms before opening an RD.

RD vs FD: which is better for savings? ▼

Both RD and FD are guaranteed, low-risk bank deposits with similar interest rates. The key difference is the deposit structure: FD requires a one-time lump sum, while RD accepts monthly instalments. Choose RD if you are a salaried person saving monthly and don't have a lump sum available. Choose FD if you have idle cash (e.g. bonus, inheritance) and want to lock it at the current rate. FD rates are sometimes marginally higher (0.10-0.25%) than RD rates at the same bank and tenure. Both are DICGC-insured up to ₹5 lakh per depositor per bank. For tax-saving purposes, FD has a slight edge as tax-saving FDs (5-year lock-in) are widely available at all banks, while only Post Office 5-year RDs qualify for 80C.

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