What is the current RD interest rate in India 2026?+
Recurring Deposit rates (1-3 year tenure): SBI RD: 6.70%, HDFC Bank: 7.10%, ICICI Bank: 7.10%, Post Office RD: 6.70% (quarterly compounding). Senior citizens get 0.25–0.50% additional. Small Finance Banks like ESAF, AU, Utkarsh offer higher rates (7.5–8.5%). RD interest is compounded quarterly.
How is RD maturity calculated?+
RD maturity uses quarterly compounding formula: M = R × [(1+i)^n – 1] ÷ [1 – (1+i)^(-1/3)], where R = monthly deposit, i = quarterly rate (annual rate ÷ 4 ÷ 100), n = tenure in months. Simpler approach: Each monthly installment is treated as a separate FD deposited for the remaining tenure. The sum of all these gives the total maturity amount.
Is RD interest taxable?+
Yes, RD interest is fully taxable under 'Income from Other Sources' at your income tax slab rate. TDS of 10% is deducted if annual interest from RD exceeds ₹40,000 (₹50,000 for senior citizens). RD interest is taxable every year as it accrues (on accrual basis), not just at maturity. Submit Form 15G or 15H to avoid TDS if your total income is below the taxable limit.
What is the difference between RD and SIP?+
RD (Recurring Deposit): Fixed monthly deposit in bank, guaranteed returns (6–8%), no market risk, interest taxable, ideal for capital preservation. SIP (Systematic Investment Plan): Monthly investment in mutual funds, market-linked returns (historically 10–15% in equity funds), tax-efficient (LTCG at 12.5% after 1 year), risk involved. Choose RD for short-term goals (1–3 years) and guaranteed returns; SIP for long-term wealth creation (5+ years).
Can I withdraw RD before maturity?+
Yes, most banks allow premature RD withdrawal with a penalty. Penalty: 0.5–1% lower interest rate than contracted rate for the period it was held. Post Office RD: No premature closure before 3 years. HDFC/ICICI: Allow premature closure after 3 months. Tax-saver RDs (5-year, 80C benefit): Cannot be closed prematurely. Always check your bank's terms before opening an RD if liquidity is a concern.