1. What is a Recurring Deposit?

A Recurring Deposit (RD) is a special type of term deposit offered by banks in India that allows people to make regular deposits and earn interest at a fixed rate. It's an excellent savings instrument for disciplined saving with guaranteed returns.

2. How Does the Calculator Work?

The calculator uses the standard RD formula:

Where:

• \( M \) — Maturity Amount (₹)
• \( P \) — Monthly Deposit Amount (₹)
• \( N \) — Number of Months
• \( R \) — Annual Interest Rate (%)

Explanation: The formula calculates the total maturity amount by adding all monthly deposits plus the interest earned on each deposit for the remaining tenure.

3. Importance of RD Calculation

Details: Accurate RD calculation helps in financial planning, understanding returns on savings, and comparing different investment options. It enables investors to make informed decisions about their savings strategy.

4. Using the Calculator

Tips: Enter monthly deposit amount in ₹, number of months (typically 6-120 months), and annual interest rate in percentage. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the minimum tenure for RD in India?
A: Most banks offer RD with minimum tenure of 6 months, while maximum can go up to 10 years (120 months).

Q2: Are RD returns taxable?
A: Yes, interest earned on RD is fully taxable as per your income tax slab. TDS may be deducted if interest exceeds ₹40,000 (₹50,000 for senior citizens).

Q3: Can I withdraw RD prematurely?
A: Yes, but premature withdrawal may attract penalty and the interest rate may be revised to the rate applicable for the period the deposit was held.

Q4: What is the minimum monthly deposit for RD?
A: Most banks allow minimum monthly deposits starting from ₹100 or ₹500, depending on the bank's policy.

Q5: How is RD interest calculated?
A: Interest is calculated quarterly using the formula: Interest = P × n × (n + 1) × r / (2 × 12 × 100), where n is number of quarters.