RD Calculator

A recurring deposit is not a monthly sum with interest bolted on

The commonest way to get an RD wrong is to treat it as a single deposit that happens to be paid in pieces. It is not. Each instalment is a separate deposit that starts earning on the day it is paid and stops on the maturity date, so the twelve instalments of a one-year RD are on deposit for twelve, eleven, ten and so on down to one month. Banks compound the balance quarterly, which gives the formula the calculator above uses:

M = Σ R × (1 + i/4)^{(n − k + 1)/3}, for k = 1 to n

R is the monthly instalment, i is the annual rate as a decimal, n is the number of instalments and k is the instalment number. Dividing the months-on-deposit by three converts them into quarters, because the compounding period is a quarter and not a month.

Work the default numbers through. ₹5,000 a month for 60 months at 6.7% puts ₹3,00,000 into the account and returns about ₹3,56,829, so the interest is roughly ₹56,829. Split that across the instalments and the shape of the product becomes obvious: the first ₹5,000 sits for 5 years and earns about ₹1,970, while the last ₹5,000 sits for a single month and earns about ₹28. Most of the interest is generated by the deposits you made in the first two years.

Why the return looks smaller than the rate you were quoted

₹56,829 of interest on ₹3,00,000 of deposits is 18.9% over 5 years. A saver seeing a 6.7% rate might have expected something closer to a third of the principal, and concludes the bank has short-changed them. It has not. The rate is applied correctly to every rupee for exactly as long as that rupee is on deposit — and on average your money is only there for about half the term.

The comparison that makes this concrete is a lump sum. Put the whole ₹3,00,000 into a fixed deposit for 5 years at the same 6.7% and it earns roughly ₹1,18,220 — more than twice the RD, at an identical rate. Nothing about the RD is worse value; you simply did not have ₹3,00,000 on day one — which is why an RD belongs next to other ways of saving a monthly surplus, not next to a fixed deposit you could not have funded.

RD or SIP: two different questions

The RD-versus-SIP argument usually collapses into a return comparison, which misses what separates them. An RD gives you a number you can rely on. The day you open it, the maturity value is fixed and no market event changes it. A systematic investment plan gives you no such assurance — its value on any chosen date is whatever the market says it is that morning.

So the choice follows the goal, not the instrument. Money with a date attached to it — a rental deposit next June, a fee due in eighteen months — belongs somewhere the amount is known, and what you pay for that certainty is the return you forgo.

Over long periods the trade reverses, because tax and inflation work together. At the 30% slab, 6.7% becomes 4.61% after tax and cess. If inflation runs above that, the deposit grows in rupees and shrinks in purchasing power, and it does so quietly, because the balance on the statement never falls. An RD held for ten years is a fairly reliable way to end up with more money that buys less. A SIP can do worse or a good deal better — which is exactly why it does not suit the eighteen-month goal an RD is built for.

The tax treatment is the same as a fixed deposit

RD interest is taxable in full as income from other sources, at your slab rate, in the year it accrues — not in the year you receive it at maturity. There is no indexation, no concessional rate and no exemption. The slab selector above applies your marginal rate plus 4% cess to the whole of the interest, which is why the after-tax line moves so sharply between the nil slab and the 30% one.

Tax deducted at source works exactly as it does on an FD. When interest paid or credited on your deposits with a single bank crosses ₹50,000 in a financial year, or ₹1,00,000 if you are 60 or over, the bank deducts 10% — 20% if it does not hold your PAN. Those thresholds were raised with effect from 1 April 2025. Two points trip people up. TDS is a prepayment and not a final tax: at the 30% slab, the 10% deducted covers less than half of what you owe, and the balance falls due when you file. And the threshold is tested per bank, so spreading deposits keeps you below it without changing what you actually owe.

If your total income is under the basic exemption limit and your estimated liability is nil, you can file Form 121, which replaced Forms 15G and 15H from 1 April 2026. The eligibility test is stricter than the folklore around it: both age groups must have a nil estimated liability and total income below the basic exemption limit, and seniors get no relief from the income condition. Senior citizens taxed under the old regime can also set up to ₹50,000 of deposit interest against income — the relief that stood as section 80TTB in the Income-tax Act, 1961, which the Income-tax Act, 2025 replaced from 1 April 2026. This calculator does not apply it.

Missed instalments, and getting out early

An RD is a commitment and the contract is written accordingly. Banks levy a default fee for each instalment you miss, generally scaled to the instalment size and to how many months it is overdue, and recover it from the maturity proceeds rather than billing you. Miss enough in succession and the account is treated as discontinued: some banks close it and pay a reduced rate, others allow revival within a window. Read your bank's schedule of charges before you fix the instalment.

Premature closure is normally permitted after a minimum period, but the interest is recomputed at the rate applicable to the period the deposit actually ran, less a penalty. Break a five-year RD at eighteen months and you earn roughly the eighteen-month rate minus the penalty — not the five-year rate for eighteen months. So size the instalment for a bad month rather than a good one. An RD you keep funding at ₹3,000 is worth more than one you open at ₹8,000 and abandon in month seven.

What this calculator cannot tell you

It cannot tell you what your bank will credit to the rupee: banks round at each quarterly rest, so expect a difference of a few rupees over a long term. Nor can it tell you whether your rate is competitive. Small finance banks, co-operative banks and the post office price recurring deposits differently from large commercial banks, and this page publishes no bank's rate, because any figure printed here would be stale within weeks. The one rate it does carry — the post office RD rate for Q2 FY 2026-27 — is a small savings rate set by notification, and those have been unchanged since April 2024, with Q2 FY 2026-27 no exception.

It also cannot tell you the thing that decides whether the deposit was worthwhile: what inflation does over your term. The after-tax figure above is in the rupees of your maturity date, not today's. And it does not know your wider position — whether your total at one bank stays inside the ₹5,00,000 of deposit insurance, or whether a borrowing costing more than 6.7% sits alongside a deposit earning it, in which case no calculator is needed to see which to fund first.