RD Calculator

What is a recurring deposit (RD)?

A recurring deposit lets you save a fixed amount every month at a fixed interest rate for a set tenure, usually 6 months to 10 years at banks and 5 years at India Post. The rate is locked in on the day you open it, and you get the deposits plus interest at maturity.

How RD maturity is calculated

Banks and the post office compound RD interest every quarter. Each monthly instalment earns interest for the time it stays deposited, so the first instalment earns the most and the last earns the least:

Maturity = Σ R × (1 + r/400)^m/3

• R = monthly deposit
• r = interest rate (% a year)
• m = months that instalment stays deposited (from the full tenure down to 1)

Worked example

₹5,000 a month for 5 years at 6.5%:

• Total deposited: ₹3,00,000
• Maturity amount: about ₹3,54,954
• Interest earned: about ₹54,954

Tax on RD interest

• RD interest is added to your income and taxed at your slab rate, in the year it is earned.
• The bank deducts TDS once your total interest from that bank crosses ₹50,000 in a year (₹1 lakh for senior citizens). Submit Form 15G or 15H if your income is below the taxable limit.

RD or FD?

An FD earns more on the same total because all the money is invested from day one. An RD suits you when you save from your monthly income and do not have a lump sum yet. Banks usually pay the same rate on both for the same tenure.

When to use a different calculator

• Investing a lump sum? Use the FD Calculator.
• Saving monthly for 15 years, tax-free? Use the PPF Calculator.
• Investing monthly in mutual funds? Use the SIP Calculator.