Calculate recurring deposit maturity amount from monthly deposits and interest rate.
Calculate recurring deposit maturity amount from monthly deposits and interest rate.
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A Recurring Deposit (RD) is a popular term deposit offered by banks in India that allows you to make regular monthly deposits of a fixed amount over a pre-determined period (tenure) while earning a fixed interest rate comparable to Fixed Deposits (FDs).
RD interest is calculated using compounding interest principles. Most Indian banks compound interest quarterly. The maturity formula is: M = P * (((1 + r)^n - 1) / (1 - (1 + r)^(-1/3))), where P is the monthly deposit, r is the quarterly interest rate (annual rate / 400), and n is the number of quarters.
An FD (Fixed Deposit) requires a one-time lump-sum deposit at the start of the tenure. An RD (Recurring Deposit) allows you to build savings gradually by making smaller, equal monthly installments throughout the tenure.
Yes, interest earned on a Recurring Deposit is taxable under Indian income tax laws. If the total interest earned across all your deposits in a single bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens), the bank will deduct Tax Deducted at Source (TDS) at 10% (or 20% if PAN is not provided).
Yes, most banks permit premature closure of RDs. However, a premature withdrawal penalty is usually charged (typically 0.5% to 1% lower than the contracted interest rate for the period the deposit remained with the bank). Partial withdrawals are generally not allowed.
A Recurring Deposit (RD) offers a structured savings mechanism for salaried individuals and regular savers to invest a fixed sum each month while earning guaranteed returns comparable to fixed deposits.
Each monthly installment compounds interest from the deposit date through the completion of the term. Installments deposited in month one compound across the entire multi-year tenure, while subsequent deposits compound for their respective remaining intervals.
Compounding Method: Indian banking guidelines apply quarterly compounding on recurring monthly installments, utilizing standard Indian Banks' Association (IBA) calculation conventions.
TDS Compliance: Interest earned on recurring deposits is fully taxable under Indian tax law. Banks deduct TDS under Section 194A when aggregate annual interest earnings across deposits surpass statutory exemption thresholds.