RD Calculator - Recurring Deposit
Enter your monthly deposit amount, the annual interest rate your bank offers, and the tenure to instantly see your RD maturity amount, total interest earned, and a year-by-year growth breakdown. The calculator uses standard quarterly compounding as applied by Indian banks and post offices. Adjust the goal mode to find how much you need to deposit each month to reach a target amount.
What is a Recurring Deposit (RD)?
A Recurring Deposit (RD) is a savings scheme offered by Indian banks and post offices that lets you deposit a fixed amount every month and earn interest on each installment until maturity. Unlike a Fixed Deposit (FD) where you invest a lump sum, an RD suits savers who can set aside a regular monthly amount. At maturity, you receive the total deposits plus all interest earned. RDs are considered low-risk because they are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to Rs 5 lakh per depositor per bank.
How the RD interest formula works
Indian banks compound RD interest quarterly, not monthly. For each installment deposited in month k, the bank computes its future value at maturity using the formula A = P x (1 + R/400)^(4t/12), where P is the installment, R is the annual rate as a percentage, and t is the remaining tenure in months for that installment. The final maturity amount is the sum of the future values of all individual installments. Because earlier installments compound for longer, the first installment earns the most interest and the last installment earns only about one month of interest.
Deposit known vs. goal known mode
This calculator offers two modes. In "Deposit known" mode, you enter the monthly installment and the calculator finds the maturity amount. In "Goal known" mode, you enter the target amount you want at maturity and the calculator tells you how much to deposit each month. The goal mode uses the same quarterly compounding formula in reverse: it computes the maturity factor for a unit deposit, then divides your target by that factor to arrive at the required monthly installment. This is useful for planning specific savings targets like a car down payment, a vacation fund, or a child's education milestone.
Tax treatment of RD interest
Interest earned on an RD is fully taxable as "Income from Other Sources" in India, and must be declared each financial year, even if the RD has not yet matured. If the total interest credited across all deposits at a single bank in a financial year exceeds Rs 40,000 (Rs 50,000 for senior citizens), the bank deducts TDS at 10%. If you do not provide your PAN, TDS is deducted at 20%. You can avoid TDS by submitting Form 15G (or 15H for senior citizens) if your total income falls below the basic exemption limit. This calculator does not include TDS; you should factor in your applicable tax slab when comparing net returns.
Typical RD interest rates in India (indicative ranges)
| Tenure | General rate (p.a.) | Senior citizen rate (p.a.) | Maturity category |
|---|---|---|---|
| 6 months - 1 year | 4.5% - 6.0% | 5.0% - 6.5% | Short-term |
| 1 year - 2 years | 6.0% - 7.0% | 6.5% - 7.5% | Medium-term |
| 2 years - 3 years | 6.5% - 7.5% | 7.0% - 8.0% | Medium-term |
| 3 years - 5 years | 6.5% - 7.5% | 7.0% - 8.25% | Long-term |
| 5 years - 10 years | 5.5% - 7.0% | 6.0% - 7.5% | Long-term |
Interest rates vary by bank and tenure. Senior citizens typically earn an additional 0.25% to 0.50% p.a. Rates are subject to change.
Frequently asked questions
What interest rate should I use in the RD calculator?
Use the rate your specific bank or post office quotes for the RD tenure you are choosing. Public sector banks typically offer 5.5% to 7% p.a., while small finance banks can offer up to 9% for certain tenures. Senior citizens generally receive an additional 0.25% to 0.50% p.a. Always check the latest rate on your bank's official website before finalising an RD, as rates change with the RBI repo rate.
How is RD maturity different from FD maturity?
In an FD, you invest a single lump sum and interest compounds on the entire principal from day one. In an RD, deposits are made monthly, so each installment earns interest only from the month it is deposited. An FD generally yields a slightly higher effective return for the same annual rate because the full principal is invested from the start, while an RD averages out the invested amount over time. However, RDs require less upfront capital and suit disciplined monthly saving.
Why does RD use quarterly compounding instead of monthly?
The Reserve Bank of India mandates that recurring deposits be compounded quarterly (four times a year) rather than monthly. This is a standard regulatory convention across all scheduled Indian banks. Some post office RD schemes use quarterly compounding as well. The quarterly rate is the annual rate divided by four, and interest is computed on this basis for each installment throughout its remaining tenure.
What happens if I miss an RD installment?
If you miss a monthly installment, most banks levy a penalty, typically Rs 1 to Rs 2 per Rs 100 per month of default, depending on the bank. If installments remain unpaid for an extended period (usually three or more consecutive months), the bank may foreclose the RD prematurely and pay interest at a reduced rate. It is important to ensure your savings account has sufficient funds on the auto-debit date to avoid penalties and possible account closure.
Can I withdraw an RD before maturity?
Yes, premature withdrawal is allowed at most banks and post offices, but it attracts a penalty, usually 0.5% to 2% reduction in the applicable interest rate. For example, if your RD is for 3 years at 7% and you break it at 2 years, the bank pays interest at the 2-year rate minus the penalty, not at the original contracted rate. Post office RDs have a lock-in period of three months, before which no premature closure is allowed.
Is RD interest taxable every year or only at maturity?
RD interest is taxable on an accrual basis every financial year, not just at maturity. You must declare the interest accrued each year in your income tax return under "Income from Other Sources," even though you receive the actual cash only at maturity. Banks deduct TDS annually on the interest credited, and you can claim credit for this TDS when you file your return.