Find the interest earned on a Recurring Deposit.
Uses the RD maturity formula, then isolates the interest earned.
Interest: Maturity − total deposited
When you run a recurring deposit, the bank passbook shows a growing balance, but it is hard to tell how much of that balance is your own money and how much is interest. This calculator separates the two. It works out the maturity value of your monthly instalments and then subtracts what you deposited, leaving the interest the bank has paid you.
Knowing the interest figure matters for three reasons. It is the part that is taxed, it is the part that TDS is deducted on, and it is the real reward for locking your money away. A shopkeeper in Indore who saves ₹8,000 a month in an RD wants to know whether the interest justifies choosing an RD over simply keeping the money in a savings account. This page gives that number directly.
1. Note the monthly instalment M, the annual rate r and the tenure N in months.
2. Find the maturity value by treating each instalment as a small FD: instalment number j stays for k = N − j + 1 months and grows to M × (1 + r ÷ 400)^(k ÷ 3).
3. Add up these values for all N instalments to get the maturity amount.
4. Compute the total deposited: M × N.
5. Interest earned = maturity amount − M × N.
6. To judge the result, divide interest by the total deposited. This ratio will be roughly half the annual rate times the tenure in years, because money is in the account for about half the tenure on average.
Suppose you deposit the same total in an FD at the start instead of spreading it over N months. The FD money earns for the whole tenure. The RD money arrives gradually, so the average instalment earns for only about (N + 1) ÷ 2 months. At the same rate, RD interest therefore comes to a little more than half of the FD interest on the same total. This is not a worse deal. It simply reflects that you did not have the money on day one.
Within each instalment, interest compounds quarterly, so an instalment that stays twelve months grows by (1 + r/400)^4, slightly more than r% simple interest. For short RDs the difference from simple interest is small, often a few hundred rupees. For RDs of five years or more it becomes noticeable. The calculator follows the quarterly-compounding convention, so its interest figure may differ by a few rupees from a bank that rounds each quarter's interest separately.
RD interest is taxed like FD interest, as income at your slab rate. Banks add RD and FD interest together when deciding whether TDS applies, using a threshold set in the tax rules. If your total income is below the taxable limit, you can submit the declaration forms banks accept to avoid TDS. Either way, the interest figure from this calculator is what you should report, even if TDS has already been deducted from it.
Farhan runs a mobile repair shop in Indore and deposits ₹8,000 every month in an 18-month RD at 7.1% to see how much interest a short RD really earns.
Answer: Interest earned ₹8,321; Maturity amount ₹1,52,321
Applying the annual rate to the total deposited for the full tenure, which roughly doubles the true interest.
Reporting only the interest actually paid out at maturity in the final year, when interest accrues every year.
Treating TDS as the tax itself. TDS is an advance, adjusted against your final liability.
Comparing RD interest with an FD of the same total without adjusting for the different time the money is invested.
Estimating taxable interest from an RD for ITR filing.
Checking whether the bank's maturity statement matches the expected interest.
Comparing the reward from an RD with the interest on a savings account balance.
Explaining to a family member how much of their RD is actually earnings.
Is RD interest taxable like FD interest?
Yes. RD interest is taxed the same way as FD interest — it is added to your income and taxed at your normal rate.