Updated June 2026

RD Calculator

Saving ₹10,000 every month in a recurring deposit? Find out how much of that the taxman and inflation quietly take from you.

₹
%
Mo
Tax Slab (TDS)
Total Deposited
Interest Earned
TDS Deducted
Maturity Amount

₹6.95 L

Total Deposited

₹6.00 L

Interest Earned

₹1.19 L

TDS Deducted

−₹23,866

RD Growth Over Time

₹0₹2.0L₹4.0L₹5.9L₹7.9L1Y2Y3Y4Y5Y
RD Value
Deposited

Year-wise Breakdown

5 years
YearDepositedInterestTaxValue
1₹1,20,000₹23,866₹4,773₹1,24,621
2₹2,40,000₹23,866₹4,773₹2,58,198
3₹3,60,000₹23,866₹4,773₹4,01,373
4₹4,80,000₹23,866₹4,773₹5,54,837
5₹6,00,000₹23,866₹4,773₹7,19,328

How Recurring Deposits Work

A Recurring Deposit (RD) allows you to save a fixed amount every month for a predetermined period. The bank compounds your deposits quarterly and returns the maturity amount at the end of the tenure. It's essentially a forced savings habit with guaranteed returns.

RD Interest Calculation

Unlike FD where a lump sum compounds from day 1, in RD each monthly installment compounds independently for its remaining tenure. The first installment earns interest for the full tenure, the second for (tenure - 1 month), and so on. Most banks use quarterly compounding.

The Tax & Inflation Problem

RD faces the same reality as FD — the "7% guaranteed return" isn't what you think:

  • At 30% tax slab: effective rate drops to ~4.9%
  • With 6% inflation: real return is approximately -1.1% per year
  • You're saving diligently every month, yet losing purchasing power

RD vs SIP: The Monthly Investment Choice

Both RD and SIP involve investing a fixed amount monthly. The key differences:

  • RD: Guaranteed 6-7%, taxed at slab rate yearly, no market risk, often negative real returns
  • SIP: Historical 10-12% (equity), taxed only on exit (LTCG 12.5% on gains > ₹1.25L), market volatility, positive real returns over 5+ years

For goals 5+ years away, SIP in a diversified equity fund has historically beaten RD by a significant margin — even after accounting for volatility.

When RD Makes Sense

  • Short-term goals (6-24 months) — too short for equity risk
  • Building a savings habit — forced monthly discipline
  • Emergency fund building — guaranteed availability at maturity
  • Zero-tax-bracket savers — no TDS hit, full rate earned

How to Use This RD Calculator

  1. Enter your monthly installment amount
  2. Set the interest rate offered by your bank (check current rates)
  3. Choose tenure in months (6 to 120 months)
  4. Select your income tax slab for accurate TDS calculation
  5. Toggle inflation to see the real value of your maturity amount

Frequently Asked Questions

How is RD interest calculated?
RD interest is calculated using quarterly compounding. Each monthly installment earns compound interest for its remaining tenure. The total maturity includes all installments plus accumulated interest on each.
Is RD interest taxable?
Yes. RD interest is fully taxable at your income tax slab rate, just like FD. TDS is deducted by banks when annual interest exceeds ₹40,000 (₹50,000 for senior citizens). The interest gets added to your total income for tax purposes.
What is the difference between RD and SIP?
Both involve monthly investments, but RD gives a fixed guaranteed return (6-7%) while SIP in mutual funds gives market-linked returns (historically 10-12% for equity). RD has no risk but often gives negative real returns after inflation + tax. SIP has short-term volatility but better long-term wealth creation.
Can I withdraw RD before maturity?
Yes, but with a penalty. Most banks charge a 1-2% penalty on premature RD withdrawal, and you get a lower interest rate (typically the rate applicable for the period the RD was held, minus the penalty). Some banks don't allow partial withdrawal — you must close the entire RD.
What is the minimum RD tenure?
Most banks offer RD with a minimum tenure of 6 months. Maximum tenure is usually 10 years. The most popular RD tenures are 1 year, 2 years, and 5 years. Some post offices offer 5-year RDs with tax benefits under Section 80C.
Is RD better than FD?
RD and FD typically offer similar interest rates. RD is better if you want to save a fixed amount monthly (like a forced savings habit). FD is better if you already have a lump sum. For the same total amount and tenure, FD gives slightly higher returns because the entire amount compounds from day 1.
Why does my RD give negative real returns?
If your RD earns 7% and inflation is 6%, your pre-tax real return is ~1%. After tax at 30% slab, effective rate drops to ~4.9% — below inflation. This means your monthly savings are losing purchasing power over time. Toggle inflation in our calculator to see this clearly.
How much tax is deducted on RD?
Banks deduct TDS at 10% on RD interest exceeding ₹40,000/year. But your actual tax depends on your slab rate. If you're in the 30% slab, you owe 30% total — so you pay the remaining 20% when filing your ITR. Submit Form 15G/H if your income is below taxable limit to avoid TDS.

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