Is RD interest taxable?

Yes. RD interest is taxed at your slab rate as income from other sources. Banks deduct TDS when interest crosses the yearly threshold.

What happens if I miss an RD instalment?

Banks usually charge a small penalty per missed instalment, and several missed instalments can lead to premature closure.

Can I break an RD early?

Yes, most banks allow premature closure with a lower interest rate, typically 0.5 to 1% less than the contracted rate.

Which is better, RD or SIP?

RD gives guaranteed returns and suits short-term goals. SIPs in equity funds can earn more over 5 or more years but their returns are not guaranteed.

Free investment tool

RD Calculator: Recurring Deposit Maturity and Interest

A recurring deposit lets you save a fixed amount every month and earn fixed deposit style interest on it. This RD calculator shows what your monthly deposits will grow to and how much interest you will earn.

Free, no sign-up · Last reviewed 12 November 2026

Monthly deposit

₹

Interest rate (p.a.)

Tenure

From 6 months to 10 years, in steps of 3 months.

Expected inflation (p.a.)

Shows what the maturity amount is worth in today's money. India's long-run average is around 5 to 6%. Set to 0 to ignore inflation.

Maturity value

₹3.6 Lakh

₹3,59,664

Invested

₹3 Lakh

Interest earned

₹59,664

Worth in today's money

₹2.69 Lakh

What ₹3.6 Lakh after 60 months can buy today, at 6% inflation.

Invested₹3 Lakh · 83%
Interest₹59,664 · 17%

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Growth over time

Banks compound RD interest quarterly. Add an inflation rate to see whether your savings are growing in real terms.

How RD maturity is calculated

Maturity = Σ R × (1 + r ÷ 4)^(months remaining ÷ 3)

R: Monthly deposit
r: Annual interest rate
÷ 4: Quarterly compounding used by most banks
Σ: Sum over every monthly instalment

Each instalment earns interest only for the months it stays in the account, so the first deposit earns the most and the last earns the least.

RD interest is taxable at your slab rate, and banks deduct TDS when total interest crosses the yearly threshold. Missing instalments can attract a small penalty.

RD vs SIP vs FD

All three suit different needs.

RD: fixed, guaranteed returns on monthly savings. Good for short-term goals.
FD: fixed returns on a lump sum you already have.
SIP: market-linked, potentially higher returns on monthly savings for long-term goals.

Questions

RD Calculator: frequently asked questions

Most banks compound RD interest quarterly. Each monthly instalment earns interest from the month it is deposited until maturity, and the calculator adds them all up.