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A Recurring Deposit lets you invest a fixed amount every month with a bank or post office for a fixed tenure, earning a guaranteed interest rate agreed upfront — the same safety profile as an FD, but built for people who want to save a set amount regularly rather than commit a lump sum all at once.
Even though you deposit monthly, Indian banks compound RD interest quarterly, exactly like an FD. Each instalment earns interest only from the month it is deposited, so your first instalment earns interest for the full tenure while your last instalment earns very little — the calculator accounts for this automatically.
RD interest is fully taxable at your income tax slab under “Income from Other Sources,” just like FD interest. From FY 2025–26, banks deduct 10% TDS once your RD interest from that bank crosses ₹50,000 in a year (₹1,00,000 for senior citizens), the same threshold as FD, subject to applicable Section 194A rules; without a PAN, TDS is 20%. Unlike a 5-year tax-saving FD, RDs do not qualify for any Section 80C deduction.
Depositing ₹5,000 every month for 1 year at 7% p.a., compounded quarterly:
Maturity value: ≈ ₹62,311 • Total deposited: ₹60,000 • Interest earned: ≈ ₹2,311 (before tax). Your actual post-tax return depends on your slab, exactly as with an FD.
Enter your monthly deposit, interest rate, and tenure in months. The calculator shows your maturity value and total interest, so you can compare RD offers across banks before opening one.
An FD suits a lump sum you already have; an RD suits building up savings from regular monthly income when you don't have a lump sum ready. Both offer the same guaranteed-return safety and are taxed identically.
Most banks allow premature closure but apply a penalty (typically 0.5–1% lower interest) and pay interest only up to the period actually completed, reducing your effective return — similar to breaking an FD early.
Banks typically charge a small penalty per missed instalment (often ₹1–15 per ₹100 per month, depending on the bank and tenure), so missing instalments quietly reduces your effective return. Set up an auto-debit to avoid this.
