Recurring Deposit (RD) Calculator
A Recurring Deposit (RD) is a disciplined savings scheme allowing you to deposit a fixed sum monthly and earn guaranteed compound interest.
How it works
Unlike a fixed deposit where a single lump sum is locked in, an RD allows regular monthly savings. The first installment earns interest for the full tenure, the second for (N-1) months, and so on, with interest compounding quarterly.
Formula
M = ∑_m=1^{N} P × (1 + (r / 4))^{(N - m + 1 / 3)}
Each monthly installment stays invested for a different length of time, compounding quarterly as per the Indian Banking Association formula.
| Symbol | Variable | Unit | Description |
|---|---|---|---|
| M | Maturity amount | ₹ | |
| P | Monthly installment | ₹ | |
| r | Annual interest rate | decimal | |
| N | Total tenure in months | months | |
| m | Month index of deposit | count |
Worked example
₹5,000 monthly for 24 months @ 7.0% p.a.
- Monthly Deposit:
- ₹5,000
- Rate:
- 7%
- Tenure:
- 24 months
Total deposited = ₹5,000 × 24 = ₹1,20,000. Applying quarterly compounding over 24 months yields a maturity value of approximately ₹1,29,088 with ₹9,088 in interest earned.
Limitations
Fixed interest rates mean you cannot benefit from rising market interest rates during the locked tenure.
Frequently asked questions
Is RD interest taxable in India?
Yes, interest earned on Recurring Deposits is fully taxable as 'Income from Other Sources' at your applicable income tax slab rate. Banks also deduct TDS if annual interest exceeds ₹40,000.
Can I withdraw money from an RD before maturity?
Yes, premature closure is permitted by banks, but the interest rate applied will be the rate applicable for the period the deposit was held, less a premature penalty (typically 0.5% to 1%).
What is the difference between RD and SIP?
An RD provides guaranteed, fixed returns and capital safety. An equity Mutual Fund SIP invests in the stock market and carries market risk, but historically offers higher long-term inflation-beating returns (12-15%).
Related calculators
Fixed Deposit (FD) Calculator
Calculate FD maturity amount and total interest earned with standard quarterly compounding for bank and corporate fixed deposits.
SIP Calculator
Calculate the future value of your SIP investments. See total invested, wealth gained, and maturity value.
Compound Interest Calculator
Calculate compound interest and total amount for any principal, rate, time, and compounding frequency.
Simple Interest Calculator
Calculate simple interest and total amount using SI = P × R × T / 100.
Last reviewed: 2026-08-22.