Question 1

How is RD interest calculated?

Accepted Answer

Each monthly installment you deposit earns interest from the date it's made until maturity, compounded quarterly: the same convention most Indian banks use, and the approach used by Groww and ClearTax's RD calculators.

Question 2

Is the RD maturity amount taxable?

Accepted Answer

Yes. Interest earned on a recurring deposit is added to your taxable income and taxed at your slab rate. Banks deduct TDS if the interest earned in a financial year exceeds the prescribed threshold (₹40,000 for most depositors, ₹50,000 for senior citizens).

Question 3

What happens if I miss a monthly installment?

Accepted Answer

Most banks charge a small penalty for delayed installments and may close the RD account if multiple installments are missed. This calculator assumes every installment is paid on time for the full tenure.

Question 4

Can I withdraw my RD before maturity?

Accepted Answer

Most banks allow premature withdrawal of an RD, but apply a penalty (typically a reduced interest rate) similar to a fixed deposit closed before maturity.

Question 5

Is an RD a good way to build an emergency fund?

Accepted Answer

An RD can work for a goal-based emergency fund where you commit to a fixed monthly amount, but remember it has a fixed tenure and an early-withdrawal penalty. For a fund you might need to access at very short notice, a savings account or a liquid mutual fund is usually more flexible; an RD is better suited to a planned, medium-term savings goal.

RD Calculator

Frequently asked questions

RD Calculator

Frequently asked questions