Question 1

How is RD interest calculated?

Accepted Answer

RD interest is calculated using the formula: M = R × [(1 + i)^n – 1] / (1 – (1 + i)^(-1/3)), where R = Monthly deposit, i = Quarterly interest rate (annual rate ÷ 4 ÷ 100), n = Number of quarters. Most Indian banks compound RD interest quarterly.

Question 2

What is the difference between RD and FD?

Accepted Answer

In an FD, you deposit a lump sum once. In an RD (Recurring Deposit), you deposit a fixed amount every month for a set period. RD is better for salaried individuals who want to save regularly. FD suits those with a large corpus to invest at once.

Question 3

What is the current RD interest rate in 2025?

Accepted Answer

Major banks offer: SBI — 6.5–7.0% p.a., HDFC Bank — 7.0–7.5% p.a., Post Office RD — 6.7% p.a. Small finance banks offer higher rates (7.5–8.5%). Senior citizens get an additional 0.25–0.5% in most banks.

Question 4

Is RD interest taxable?

Accepted Answer

Yes. RD interest is fully taxable as per your income tax slab. TDS is deducted at 10% if interest exceeds ₹40,000/year (₹50,000 for senior citizens). Unlike PPF, RD does not enjoy EEE tax status.

Question 5

Can I break an RD before maturity?

Accepted Answer

Yes, premature closure is allowed in most banks, usually with a penalty of 0.5–1% interest. Some banks have a minimum lock-in period of 3–6 months before premature closure is permitted.

Quarter	Value	Interest
Q1	₹15,175	+₹175
Q2	₹30,615	+₹615
Q3	₹46,325	+₹1,325
Q4	₹62,311	+₹2,311
Q5	₹78,576	+₹3,576
Q6	₹95,125	+₹5,125
Q7	₹1.12 L	+₹6,965
Q8	₹1.29 L	+₹9,099

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