Recurring Deposit (RD) Calculator
Simulate monthly recurring deposits with official quarterly compounding, compare Post Office and major bank rates (SBI, HDFC), senior citizen bonuses (+0.50%), and monitor Section 194A TDS limits.
Deposit Parameters
Configure monthly investment and bank rates
⚖️ Section 194A TDS Status
No TDS DeductionYour estimated annual interest is well within the ₹40,000 limit. The bank will not deduct 10% TDS.
Year-by-Year Wealth Accumulation
Track cumulative deposits and quarterly compounding interest growth
| Year / Period | Deposits in Year | Cumulative Principal | Interest in Year | Cumulative Interest | Closing Balance |
|---|
How Recurring Deposits Compare to Alternatives
RD vs Fixed Deposit (FD)
FD requires a single lump-sum upfront, whereas RD lets you build wealth steadily with disciplined monthly installments. Both earn identical quarterly compounded bank interest and share the same Section 194A TDS limits.
RD vs Mutual Fund SIP
RD guarantees capital protection and a locked-in return rate, making it ideal for short-term goals (1–3 years). Mutual fund SIPs are market-linked with higher potential returns (12–15%) and indexation benefits for long-term wealth creation (5+ years).
RD vs Public Provident Fund (PPF)
RD interest is fully taxable under your income tax slab, whereas PPF enjoys EEE tax exemption status (tax-free deposit, interest, and maturity) with a sovereign 7.10% rate and a 15-year lock-in period.
Understanding Indian Recurring Deposit Rules & Taxation
Recurring Deposits (RD) are one of India's most popular risk-free savings instruments. Whether you invest with India Post or commercial banks like SBI and HDFC, knowing how quarterly compounding, senior citizen concessions, and TDS rules work will help you maximize your net returns.
📐 How Does the Quarterly Compounding Formula Work?
In India, RD interest is not computed using simple interest. Instead, it follows the Reserve Bank of India (RBI) quarterly compounding formula:
Where \(P\) is the monthly deposit installment, \(r\) is the annual interest rate, and \(t\) is the remaining fraction of the year for that installment. Because each monthly deposit spends a different amount of time in the bank, earlier deposits earn substantially more compounding interest than later ones.
📝 Avoiding TDS via Form 15G and Form 15H
Under Section 194A of the Income Tax Act:
- Regular Citizens: 10% TDS is deducted if interest across all bank branches exceeds ₹40,000 per financial year (20% if PAN is not submitted).
- Senior Citizens (60+): The threshold is raised to ₹50,000 under Section 80TTB.
If your total annual taxable income is below the basic exemption limit (e.g. ₹3 Lakh under New Tax Regime), you can submit Form 15G (or Form 15H for seniors) at the beginning of the financial year to stop the bank from deducting TDS.
Frequently Asked Questions (FAQs)
What happens if I miss an RD monthly installment? ▼
Banks and the Post Office levy a small penalty for missed monthly installments (typically ₹1 to ₹1.50 per ₹100 of deposit per month of delay). In India Post Office RDs, if you default on 4 consecutive installments, the account becomes discontinued and can be revived within 2 months by paying default fees.
Can I withdraw money or close my RD account prematurely? ▼
Yes, premature withdrawal is permitted in most banks and Post Office RDs. However, banks usually impose a penalty of 0.50% to 1.00% lower interest rate than the contracted rate for the period the deposit actually remained with the bank. In Post Office RDs, premature closure is permitted only after 3 years from the opening date.
Is RD interest tax-free under Section 80C? ▼
No. Standard Recurring Deposits (both bank and Post Office) do not qualify for Section 80C tax deductions, and interest earned is taxable under "Income from Other Sources" at your applicable slab rate. Only 5-Year Tax-Saver Fixed Deposits (FDs) qualify for Section 80C deductions up to ₹1.5 Lakh.
Can I take a loan against my Recurring Deposit? ▼
Yes. Most Indian banks (SBI, HDFC, PNB) and India Post allow loans or overdraft facilities up to 80% to 90% of the accumulated deposit value. The interest charged on such loans is generally 1% to 2% above the RD interest rate, eliminating the need to break the deposit prematurely.
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