How to interpret your result
The Maturity Value compounds your interest quarterly on the running balance of your monthly deposits — not a flat sum of principal plus a single interest calculation, so don't estimate it by hand as amount × months × rate.
Unlike a 5-year tax-saving FD, a regular RD does not qualify for Section 80C deduction — neither your monthly deposits nor the interest earned reduce your taxable income, and the interest is fully taxable at your slab rate (with TDS applying above ₹40,000/year in total bank interest).
RD interest is fully taxable, so it suits disciplined monthly saving more than tax planning — for an 80C-eligible alternative that also uses monthly-style contributions, compare against the PPF Calculator or Sukanya Samriddhi Calculator if applicable to your situation.
What an RD maturity value actually includes
Enter your monthly deposit, interest rate, and tenure to see your maturity amount and total interest earned. Interest on an RD compounds quarterly (same convention as a bank FD), so the maturity value is slightly higher than a naive "monthly deposit × months + simple interest" estimate — each instalment earns interest for a different length of time depending on when it was deposited.
Example: ₹5,000/month for 3 years at 7% p.a. compounded quarterly gives a maturity value of roughly ₹1,99,000 against ₹1,80,000 deposited — about ₹19,000 in interest.
No, RD does not get you a Section 80C deduction
This is worth stating plainly because it's a common mix-up: a regular Recurring Deposit is not an 80C-eligible investment — neither the deposits nor the interest. Only a specific 5-year tax-saving fixed deposit qualifies under 80C. If your goal is a disciplined monthly saving habit that also reduces taxable income, a PPF contribution or an ELSS SIP does that; a plain RD does not.
RD interest is fully taxable — and TDS applies
Interest earned on an RD is added to your income and taxed at your slab rate — there's no special treatment. Banks deduct 10% TDS if your total interest income from that bank crosses ₹40,000 in a financial year (₹50,000 for senior citizens). If your total income is below the taxable threshold, submit Form 15G (or 15H if you're a senior citizen) to the bank to avoid TDS being deducted at source.
RD vs SIP vs FD
| RD | SIP (equity fund) | FD | |
|---|---|---|---|
| Return | Fixed, ~6.5-7.5% p.a. | Market-linked, not guaranteed | Fixed, similar to RD |
| Risk | None (bank-guaranteed up to ₹5L DICGC) | Market risk | None |
| Commitment | Fixed monthly amount required | Flexible, can pause | One-time lump sum |
| Best for | Short-term goals (1-3 years), capital protection | Long-term wealth building (5+ years) | Lump sum you already have |
| 80C benefit | No (regular RD) | Yes, if ELSS | Only 5-year tax-saving FD |
RD works well for a known short-term goal (a planned purchase, a tax payment set aside monthly) where you can't tolerate any capital loss. For longer horizons, a SIP has historically outperformed RD/FD returns, at the cost of market risk.