RD Calculator

Indian banks calculate RD maturity using quarterly compounding applied to each monthly instalment individually: M = P × [{(1+i)ⁿ − 1} ÷ {1 − (1+i)^(−1/3)}], where P is the monthly instalment, i is the quarterly rate, and n is the total number of instalments. This matches how banks actually credit RD interest, so the result closely tracks your bank's own maturity figure.

Per RBI convention, nearly all Indian banks compound RD interest quarterly — four times a year — rather than monthly or annually. Each monthly instalment earns interest from the date it is deposited until maturity, with interest added to the principal at the end of every quarter before the next quarter's interest is calculated.

Banks deduct 10% TDS (with PAN on file) if your total interest from RDs and FDs at that bank exceeds ₹40,000 in a financial year for regular depositors, or ₹50,000 for senior citizens. Without PAN, the TDS rate is 20%. The threshold applies per bank, not per account, so multiple RDs at the same bank are aggregated.

If your total income for the financial year is below the basic taxable limit, you can submit Form 15G (under age 60) or Form 15H (senior citizens) to your bank at the start of each financial year, declaring that no tax is due. This instructs the bank not to deduct TDS. If you don't qualify but TDS is still deducted, you can claim it back as a refund when filing your Income Tax Return.

Yes — RD interest is fully taxable at your applicable income tax slab rate as "Income from Other Sources," regardless of whether TDS was deducted. TDS is simply a mechanism for the bank to collect tax in advance; submitting Form 15G/15H or staying under the threshold avoids TDS deduction, but it does not exempt the interest income from tax if your total income is otherwise taxable.

Most banks charge a penalty for a missed or delayed RD instalment, typically ranging from ₹1 to ₹15 per ₹100 of the instalment amount per month of delay, depending on the bank and tenure. Repeated defaults beyond a certain number of instalments can lead to the bank closing the RD account prematurely, usually at a lower applicable interest rate.

Yes, most banks allow premature closure of an RD, but typically apply a penalty — often a reduction of 0.5–1% from the rate applicable for the period the RD was actually held, rather than the original contracted rate. Some banks also have a minimum lock-in period (commonly 3 months) before premature withdrawal is permitted at all.

Yes — most Indian banks offer senior citizens (typically aged 60 and above) an additional 0.25–0.50% interest rate over the regular RD rate, along with a higher TDS-free threshold of ₹50,000 instead of ₹40,000. This combined benefit makes RDs a particularly attractive low-risk option for retirees.

For long-term goals (7+ years), a mutual fund SIP has historically delivered higher returns than an RD, though it carries market risk and no guarantee. RD suits short-to-medium term, capital-protected goals where you cannot afford the value to fall. Many investors use RD and SIP together — RD for near-term, safety-first needs, and SIP for long-term wealth creation.

An RD calculator that correctly uses quarterly compounding, matching standard bank practice, should produce a maturity figure very close to your bank's own statement, before TDS. Minor differences can arise from the exact day-of-month your instalment is debited, or bank-specific rounding conventions — always confirm the final figure with your bank's passbook or statement.