Calculate maturity value of a recurring deposit at any bank or post office.
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Formula
Maturity Value (M) = P × ((1+i)^n − 1) / (1 − (1+i)^(−1/3))
Where P is the monthly deposit, i is the quarterly interest rate (annual rate ÷ 4 ÷ 100), and n is the total number of quarters in the tenure.
Most Indian banks and India Post compound RD interest quarterly. The slightly complex denominator handles the fact that you make three deposits per quarter but interest compounds quarterly.
Worked Examples
If you deposit ₹5,000 every month for 5 years (60 months) in an RD at 7% per annum: M ≈ ₹3,57,800. Total deposited = ₹3,00,000. Interest earned = ₹57,800.
About the RD Calculator
A Recurring Deposit (RD) is a powerful disciplined savings tool in India, especially for those who don't have a large lump sum but want the safety and fixed returns of an FD. By committing a fixed amount every month, you build a large corpus for specific goals like an annual holiday, school fees, or a down payment. This RD calculator uses the standard Indian banking formula to show you exactly how much you will receive at maturity.
How RD Interest is Calculated in India
RD interest calculation is slightly more complex than FD. Every monthly instalment compounds for a different duration. Your first month's instalment compounds for the full tenure, while the last month's instalment compounds for only one month. Indian banks use quarterly compounding for RDs. The formula used is the 'Future Value of a Series of Monthly Deposits' with quarterly compounding. Our calculator implements the exact IBA (Indian Banks' Association) formula to ensure your results match your bank's passbook.
RD vs SIP: Which One is Better?
This is a common debate in India.
- RD: Offers guaranteed returns. You know the exact maturity amount on day one. It is best for short-term goals (1-3 years) where you cannot afford any risk to your capital.
- SIP (Mutual Fund): Offers potentially higher returns but with market risk. Best for long-term goals (5+ years).
If you are saving for your daughter's wedding next year, an RD is safer. If you are saving for her college 10 years away, a SIP in an equity fund is likely better. Use our SIP Calculator to compare the two side-by-side.
Taxation and TDS on RD
Just like FDs, RD interest is fully taxable at your income tax slab rate.
1. TDS: Since 2015, Indian banks have been required to deduct TDS on RD interest if it exceeds ₹40,000 (₹50,000 for seniors) in a year.
2. PAN Requirement: Ensure your PAN is linked to your bank account to keep TDS at 10%. Without a PAN, the bank will deduct 20% TDS, which can significantly eat into your returns.
Senior Citizen Benefits in RD
Senior citizens in India get the same interest rate boost (usually 0.50% extra) on RDs as they do on FDs. For a grandmother saving for her grandchild's birthday every month, this extra interest adds up significantly over 3-5 years.
Premature Withdrawal Rules
While you can close an RD before maturity, banks typically charge a penalty of 1% on the interest rate. More importantly, if you miss a monthly instalment, many Indian banks charge a small 'default' penalty (e.g., ₹1 per ₹100 of the monthly instalment). It is crucial to maintain a sufficient balance in your linked savings account to ensure the SI (Standing Instruction) doesn't bounce.
Frequently Asked Questions
What is the minimum and maximum RD tenure?
Most banks offer RDs from 6 months to 10 years in 3-month increments. India Post offers RDs starting from 5 years.
Can I withdraw an RD before maturity?
Yes, premature closure is allowed but with a penalty of 0.5-1% on the applicable interest rate. The interest paid may be the rate that would have applied for the actual tenure.
Is RD interest taxable?
Yes, RD interest is fully taxable as 'Income from Other Sources' at your slab rate. Since FY 2015-16, banks also deduct TDS on RD interest above the threshold.
Is RD better than SIP?
RD is safer with guaranteed returns of around 6-7%, while equity SIP carries market risk but has historically delivered 10-12% over 10+ years. RDs suit short-term goals (1-3 years); SIPs suit long-term wealth building (7+ years).
What happens if I miss an RD instalment?
Most banks charge a small late fee (around ₹1-2 per ₹100 of monthly deposit) for missed instalments. If you miss more than 4 consecutive instalments, the account may be closed prematurely.