Question 1

How is RD interest calculated in India?

Accepted Answer

Indian banks use quarterly compounding for RDs. Each monthly installment earns compound interest from its deposit date. The interest is credited at the end of each quarter. Total interest = Maturity Amount − Total Deposited.

Question 2

What is the difference between RD and FD?

Accepted Answer

A Fixed Deposit (FD) requires a lump sum investment at once. A Recurring Deposit (RD) requires smaller fixed monthly contributions. RD suits regular savers while FD suits those with surplus funds. Both offer similar interest rates with quarterly compounding.

Question 3

Is RD interest taxable?

Accepted Answer

Yes. RD interest is fully taxable as "Income from Other Sources" at your applicable tax slab rate. TDS (Tax Deducted at Source) is applicable at 10% if interest in a financial year exceeds ₹40,000 (₹50,000 for senior citizens).

Question 4

Can I withdraw an RD before maturity?

Accepted Answer

Yes, but premature withdrawal incurs a penalty, typically 0.5–1% reduction in the applicable interest rate. Some banks allow loans against RD accounts up to 80–90% of the deposit value without breaking it.

Question 5

What is the minimum tenure for an RD?

Accepted Answer

Most banks offer RD tenures from 6 months to 10 years. The minimum is typically 6 months. Our calculator requires a minimum of 3 months as a practical lower bound for quarterly compounding.

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Frequently Asked Questions

How is RD interest calculated in India?

What is the difference between RD and FD?

Is RD interest taxable?

Can I withdraw an RD before maturity?

What is the minimum tenure for an RD?

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