Estimated Return: ₹30,05,718.75
Principal Amount: ₹30,00,000
Interest Earned: ₹5,718.75
| No. | Year | Opening Balance (₹) | Interest (₹) | Total (₹) |
|---|
| 1 | 2025 | ₹0 | ₹0 | ₹6,00,000 |
| 2 | 2026 | ₹6,00,000 | ₹45,000 | ₹12,45,000 |
| 3 | 2027 | ₹12,45,000 | ₹93,375 | ₹19,38,375 |
| 4 | 2028 | ₹19,38,375 | ₹1,45,378.13 | ₹26,83,753.13 |
| 5 | 2029 | ₹26,83,753.13 | ₹2,01,281.48 | ₹34,85,034.61 |
Understanding Recurring Deposits (RD) in India
A Recurring Deposit (RD) is a popular investment option in India that allows individuals to invest a fixed amount every month for a predetermined period. It is offered by banks and post offices and is ideal for building savings through regular monthly contributions with attractive interest rates.
How Does a Recurring Deposit Work?
- You choose a fixed monthly deposit amount and tenure (usually 6 months to 10 years).
- You deposit the amount every month on a fixed date.
- The amount earns interest similar to fixed deposits, compounded quarterly.
- At maturity, you receive the total deposited amount plus interest earned.
Pros and Cons of Recurring Deposits
Pros
- Encourages regular savings habit with discipline.
- Low-risk investment with assured returns.
- Ideal for short-to-medium-term goals.
- Available to all age groups, including minors and senior citizens.
Cons
- Premature withdrawal leads to penalty and lower interest.
- Returns are lower than market-linked instruments like mutual funds.
- No tax benefits under Section 80C (unlike some FDs).
- Missed monthly payments can incur penalty or account closure.
RD Interest Rates & Factors That Influence Returns
RD interest rates in India vary across banks and financial institutions. They generally range between 5% to 7.5% annually and are influenced by:
- Deposit tenure – longer tenures may offer higher returns.
- Bank’s policies and prevailing market interest rates.
- Type of account holder (senior citizens may get higher rates).
- RBI’s monetary policy and repo rate trends.
Who is Eligible for a Recurring Deposit?
- Indian residents, including minors (through guardians).
- HUFs (Hindu Undivided Families), senior citizens, and salaried individuals.
- NRIs can open NRE/NRO RD accounts in select banks.
- Basic KYC documents required: PAN, Aadhaar, etc.
RD Rules & Taxation in India
- Minimum deposit amount: ₹100 or as specified by the bank.
- Tenure: From 6 months to 10 years (depending on the institution).
- Premature closure is allowed with reduced interest and penalty.
- Taxation:
- Interest earned is fully taxable under “Income from Other Sources.”
- TDS is applicable if interest exceeds ₹40,000/year (₹50,000 for senior citizens).
- Form 15G/15H can be submitted to avoid TDS if income is below threshold.
Conclusion
Recurring Deposits are a safe and structured way to grow your savings gradually. They offer fixed returns and are ideal for conservative investors and those with short-term financial goals. Compare RD interest rates across different banks and choose one that fits your budget and tenure preference.
Try the RD Calculator Now