Understanding Recurring Deposits
A Recurring Deposit (RD) lets you invest a fixed amount every month for a chosen tenure, earning a guaranteed interest rate. It is ideal for salaried individuals who want to build savings gradually with the discipline of monthly contributions.
Most Indian banks compound RD interest quarterly. Unlike a fixed deposit where you invest a lump sum once, an RD spreads your investment across months — so early deposits earn interest for longer than later ones.
Frequently Asked Questions
How is RD interest calculated?
RD interest is usually compounded quarterly. Each monthly deposit earns interest for the remaining tenure, and the maturity is the sum of all deposits plus accumulated interest.
Is RD interest taxable?
Yes. RD interest is added to your income and taxed as per your slab. TDS may apply if total interest exceeds ₹40,000 per year (₹50,000 for senior citizens).