Recurring Deposit (RD) Calculator | Post Office & Bank RD | Paisa Planner

How is RD Interest Calculated?

In India, banks and the Post Office compound RD interest on a quarterly basis. However, since you deposit money every month, the interest calculation is slightly complex. The first installment earns interest for the entire tenure, the second for tenure minus one month, and so on. Our calculator handles this complex quarterly compounding logic to give you the exact maturity amount.

Taxation on RD Returns

The interest earned on a Recurring Deposit is fully taxable as per your income tax slab. Banks will deduct a 10% TDS (Tax Deducted at Source) if the total interest earned from all FDs and RDs across all branches of the bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). If your total income is below the taxable limit, you can submit Form 15G/15H to avoid TDS.

Frequently Asked Questions

RD vs SIP: Which is better?

An RD offers guaranteed, risk-free returns but is subject to your income tax slab. A Mutual Fund SIP carries market risk but historically offers much higher returns and better tax efficiency (12.5% LTCG tax after 1 year). RDs are best for short-term goals (1-3 years), while SIPs are ideal for long-term goals (5+ years).

Can I withdraw my RD before maturity?

Yes, premature withdrawal of an RD is allowed. However, banks usually charge a penalty of 1% to 2% on the interest rate, and you will only earn interest for the period the money was actually deposited with the bank.

What is the minimum tenure for an RD?

Most banks allow you to start an RD for a minimum tenure of 6 months. Post Office RDs typically come with a fixed tenure of 5 years.