RD Calculator
Calculate returns on your Recurring Deposit and plan your systematic savings
What is Recurring Deposit (RD)?
A Recurring Deposit (RD) is a savings scheme where you deposit a fixed amount regularly (usually monthly) for a predetermined period. At maturity, you receive the total deposited amount plus interest. RD is ideal for individuals who want to develop a habit of regular savings while earning better returns than regular savings accounts.
How Does RD Work?
When you open an RD account, you commit to depositing a fixed amount every month for a specific tenure (typically 6 months to 10 years). The bank calculates interest on a quarterly basis, and the interest is compounded. At maturity, you receive your total deposits plus the accumulated interest. RD interest rates are generally higher than savings account rates.
Benefits of Recurring Deposits
- Regular Savings Habit: Encourages disciplined monthly saving behavior
- Guaranteed Returns: Fixed interest rates ensure predictable returns
- Flexible Amount: Start with small amounts as low as ₹100 per month
- Higher Interest: Better rates compared to regular savings accounts
- Flexible Tenure: Choose tenure from 6 months to 10 years
- Loan Facility: Many banks offer loans against RD deposits
Types of RD Accounts
Bank RD
- Offered by commercial banks
- Interest rates typically 4-7%
- TDS applicable on interest above ₹40,000
- Flexible tenure options
Post Office RD
- Offered by India Post
- Fixed interest rates set by government
- Tax benefits under Section 80C
- 5-year tenure option available
RD Interest Calculation Formula
The formula for calculating RD maturity amount is:
M = R × [(1 + r/n)^(n×t) - 1] / (r/n) × (1 + r/n)
- M = Maturity Amount
- R = Monthly Deposit Amount
- r = Annual Interest Rate (in decimal)
- n = Number of times interest is compounded per year (usually 4 for quarterly)
- t = Time Period in years
Taxation on RD Interest
- TDS Deduction: 10% TDS deducted if interest exceeds ₹40,000 (₹50,000 for senior citizens)
- Taxable Income: RD interest is fully taxable as "Income from Other Sources"
- Tax Slab: Taxed according to your income tax slab
- No Tax Benefits: No tax deduction benefits except for Post Office RD (Section 80C)
- Form 15G/15H: Submit to avoid TDS if total income is below taxable limit
Who Should Invest in RD?
- Salaried Individuals: Perfect for monthly salary savers
- Risk-Averse Investors: Safe investment option with guaranteed returns
- Students: Build savings habit with small monthly amounts
- Senior Citizens: Regular income option with higher rates
- Short-term Goals: Save for goals 1-3 years away
- Emergency Fund: Systematic way to build emergency savings
RD vs SIP vs FD
RD
- Guaranteed returns
- Fixed interest rate
- Regular monthly deposits
- No market risk
SIP
- Market-linked returns
- Higher potential returns
- Market risk involved
- Regular investments
FD
- One-time deposit
- Fixed returns
- No regular deposits
- No market risk
Tips for Maximizing RD Returns
- Compare Rates: Check RD rates across multiple banks before investing
- Choose Right Tenure: Longer tenure generally offers higher rates
- Senior Citizen Benefits: Senior citizens get 0.25-0.5% higher rates
- Auto-debit Facility: Set up auto-debit to ensure timely deposits
- Nomination: Add nominee for smooth transfer of funds
- Premature Withdrawal: Understand penalty charges before investing