RD Tax Calculator

Why the interest looks small next to a fixed deposit’s

It is not a worse rate. In a recurring deposit your first instalment earns for the whole tenure and your last earns for a single month, so the average rupee sits in the account for 30.5 of 60 months. A lumpsum deposit of the same total would have every rupee there from day one — which is why it earns more, at exactly the same rate.

The annualised rate is solved from the instalment series rather than assumed, so it reflects when each rupee actually arrived. Illustration only, computed from the assumptions shown — not a forecast, a projection of any product's performance, or a guarantee. Rates, prices and rules change, so the actual outcome will differ.

Recurring deposits do have TDS

A common belief that they do not. Section 194A was extended to recurring deposits from 1 June 2015, on the same thresholds and at the same 10% as a fixed deposit — withheld once a year’s interest passes ₹50,000.

Nothing is withheld here, because no year’s interest reaches ₹50,000. That does not make it exempt — the whole ₹18,615 is still owed, and no certificate arrives to remind you of it. This is the ordinary position for a modest recurring deposit, and the reason its tax is so often missed.

Illustration only, computed from the assumptions shown — not a forecast, a projection of any product's performance, or a guarantee. Rates, prices and rules change, so the actual outcome will differ.

Nothing about an RD deducts, in either regime

There is no recurring-deposit equivalent of the five-year tax-saving fixed deposit, so nothing here qualifies under Section 80C — the regime you are on does not change that. Section 80TTA does not reach it either; that covers savings account interest alone, which is a distinct relief people routinely apply to the wrong product.

The one relief that does reach deposit interest is Section 80TTB, for depositors of 60 and over under the old regime. Below that age the regime toggle above changes nothing on this page.

Illustration only, computed from the assumptions shown — not a forecast, a projection of any product's performance, or a guarantee. Rates, prices and rules change, so the actual outcome will differ.

Year by year

Interest is taxable in the year it accrues, even though a recurring deposit pays you nothing until it matures. Each year’s figure appears in your Annual Information Statement.

Illustration only, computed from the assumptions shown — not a forecast, a projection of any product's performance, or a guarantee. Rates, prices and rules change, so the actual outcome will differ.

What this assumes

• Every instalment is paid on time. Banks charge a small penalty for a missed or late instalment and may close a deposit that lapses repeatedly. Neither is modelled.
• Your slab rate stays where it is. The tax on each year’s interest depends on your total income that year, which will move over a tenure this long.
• This deposit is your only interest income. The withholding threshold applies per bank, and Section 80TTB is one allowance across every deposit you hold.
• Premature closure usually costs a rate penalty of around one per cent and is not modelled. Surcharge is excluded; the 4% cess is included in the tax figures.

No returns are assured or guaranteed. Any illustration of returns is a mathematical projection, not a promise. Bank deposits are covered by DICGC insurance up to ₹5 lakh per depositor per bank. GrowIQ Capital is a mutual fund distributor, does not distribute deposits and does not provide tax advice — this is arithmetic on the figures you entered, for discussion with a qualified tax adviser.