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RD Calculator — Recurring Deposit 2026

Updated: 3 June 2026  |  Interest taxable at slab rate  |  TDS threshold: ₹40,000/year

RD (Recurring Deposit) maturity amount is calculated using quarterly compounding on each monthly installment. Each installment earns compound interest from its deposit date to maturity — installments deposited earlier earn more. The key formula (quarterly compounding): M = R × [(1+r/4)^(4t) − 1] / [1 − (1+r/4)^(−1/3)]. RD interest is fully taxable as income from other sources at your applicable slab rate. TDS of 10% is deducted if total bank interest exceeds ₹40,000/year (₹50,000 for senior citizens). Submit Form 15G/15H to avoid TDS if your total income is below the taxable limit.
100% Taxable
RD interest is fully taxable at your income tax slab rate.
No Section 80C benefit. TDS deducted at 10% if total bank interest exceeds ₹40,000/year. File Form 15G/15H to avoid TDS if applicable.

RD Maturity Calculator

RD Interest Rates — Major Banks (June 2026)

Bank 1 Year RD 2 Year RD 3 Year RD Senior Citizen
SBI6.80%7.00%6.75%+0.50%
HDFC Bank6.60%7.00%7.00%+0.50%
ICICI Bank6.70%7.00%7.00%+0.50%
PNB6.80%6.80%6.50%+0.50%
Post Office RD6.70%6.70%6.70%No extra

Rates are indicative and subject to change. Always check with your bank before opening an RD. Post Office RD has a minimum tenure of 5 years. Senior citizens typically receive an additional 0.25%–0.75% over regular rates.

Frequently Asked Questions

How is RD interest calculated?
For a Recurring Deposit with quarterly compounding (standard for most Indian banks), each monthly installment earns compound interest from its deposit date to maturity. The effective formula: M = R × [(1+r/4)^(4n) − 1] / [1 − (1+r/4)^(−1/3)], where R is the monthly installment, r is the annual interest rate, and n is the tenure in years. In practice, banks calculate interest on each installment separately and sum the maturity values. Post Office RDs use quarterly compounding. The result is slightly higher than simple interest but lower than FD (since installments are added monthly).
Is RD interest taxable?
Yes. RD interest is fully taxable as "income from other sources" at your applicable income tax slab rate — unlike PPF (tax-free) or NPS maturity (partially tax-free). There is no Section 80C deduction for RD investments. The interest must be reported in your ITR every year on an accrual basis (not just when you receive the maturity amount). If your total bank interest (savings + FD + RD combined) exceeds ₹10,000/year (savings account interest eligible for 80TTA up to ₹10K), the excess is taxable.
What is TDS on RD?
Banks deduct TDS (Tax Deducted at Source) at 10% if your total interest income from that bank (from all FDs, RDs, and savings accounts combined) exceeds ₹40,000 in a financial year (₹50,000 for senior citizens aged 60+). TDS is deducted at 20% if PAN is not provided. To avoid TDS, submit Form 15G (for non-senior citizens with nil tax liability) or Form 15H (for senior citizens) to the bank at the start of each financial year. TDS deducted is not your final tax — you still pay tax on the actual interest at your slab rate and can claim TDS credit.
Can I break RD before maturity?
Yes, most banks allow premature closure of an RD, but with a penalty. Typically, banks deduct 0.5% to 1% from the applicable interest rate for the period the RD was held. For example, if you opened a 2-year RD at 7% and close it after 1 year, the bank may credit interest at the 1-year rate minus penalty (e.g., 6.5% instead of 6.8%). Post Office RD does not allow premature closure before 3 years from the date of opening, except in special circumstances. Some banks also offer a loan of up to 90% of the RD balance as an alternative to premature closure.
RD vs FD — which is better?
RD is better if you want to invest a fixed amount monthly (salary-based saving). FD is better if you have a lump sum to invest at once — FD gives a slightly higher effective return since the full amount earns interest from day 1. Interest rates are generally the same for both products for the same tenure at the same bank. RD offers disciplined monthly savings; FD maximises returns on existing lump sums. For tax purposes, both are treated identically — interest is taxable at slab rate and TDS applies above ₹40,000/year. If you have both a lump sum and monthly savings capacity, FD + RD together works well.

Related Pages

FD Calculator PPF Calculator Income from Other Sources TDS on FD/RD Form 15G / 15H
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