RD uses quarterly compounding in India. Formula: M = R × [(1 + i)^n – 1] / (1 – (1 + i)^(–1/3)) where i = rate/400, n = quarters. This calculator uses the exact RBI-approved formula.
RD Calculator — Recurring Deposit Explained
What is a Recurring Deposit (RD)?+
A Recurring Deposit (RD) is a fixed monthly savings product offered by Indian banks and post offices. You deposit a fixed amount every month for a chosen tenure (6 months to 10 years), and the bank pays compound interest (quarterly compounding as per RBI mandate). At maturity, you receive the total principal plus accumulated interest. RD is ideal for building a savings habit with guaranteed, risk-free returns.
What are current RD rates in India (2026)?+
As of 2026, major bank RD rates: SBI offers 6.5–7.0% for 1–5 years; HDFC Bank offers 7.0–7.25%; ICICI Bank offers 6.75–7.0%; Axis Bank offers 7.0–7.25%. Small Finance Banks (like AU, Ujjivan) offer 7.5–9.0% with higher rates for senior citizens (+0.25–0.50%). Post Office RD currently offers 6.7% for 5-year RD. Always verify current rates directly with the bank before opening an RD.
RD vs SIP — which is better?+
RD gives guaranteed, risk-free returns (6.5–7.5%) but returns are lower and interest is fully taxable. SIP in equity mutual funds gives potentially higher returns (10–15% historical) but with market risk. RD is better for: short-term goals (1–3 years), risk-averse investors, emergency fund building, and capital preservation. SIP is better for: long-term wealth creation (5+ years), beating inflation, and higher post-tax returns (LTCG at 10% vs RD interest at your income tax slab).
Is RD interest taxable in India?+
Yes. RD interest is fully taxable as "Income from Other Sources" at your applicable income tax slab rate. If annual interest exceeds ₹40,000 (₹50,000 for senior citizens), TDS at 10% is deducted by the bank. You must include RD interest in your ITR every year on an accrual basis (not just at maturity). Submit Form 15G/15H to avoid TDS if your total income is below the taxable limit. Unlike PPF or ELSS, RD has no tax exemption on interest.
Can I break an RD before maturity?+
Yes, but with a penalty. Banks typically charge 0.5–1% penalty on the applicable interest rate for premature closure. For example, if your RD is at 7% for 2 years and you break it at 1 year, you'll receive interest at the 1-year RD rate minus 0.5–1%. Some banks allow RD premature closure without penalty after a minimum period. Post Office RD has stricter premature withdrawal rules — not allowed before 3 years (except for death of account holder). Always read the terms before opening an RD.