Recurring Deposit Calculator

Last Updated on

A recurring deposit (RD) is a terrific instrument for meeting important short-term goals. If I can claim to have some financial discipline it is because I observed my parents open RDs for meeting their short term goals ranging from paying insurance premium to my school fee. For the new generation of investors I guess the RD could be introduced  as a SIP in a debt fund with a predetermined rate of return!

For important short-term goals (say, 3 years or less) a RD is a guaranteed way of saving, irrespective of ones tax bracket. It is surprising to see many ‘experts’ talk only about debt funds and ignore RDs. If I wanted to save for my sons school-joining fee I will trust only a RD. If I wanted an SLR camera, and can wait a year or more, I will probably invest in a liquid debt fund or an ‘arbitrage’ mutual fund.

The only issue with RDs is tax computation. Although banks do not deduct tax on RD interest it is entirely taxable and should be paid on an accrual basis,. That is the interest earned in each financial year should be declared for tax computation. Taxation is as per income slab. Trouble is RDs are typically compounded quarterly and the interest earned each FY is not obvious at all.

Here is a RD calculator which give you the tax liability each FY for different types of compounding (annual, half-yearly, quarterly and monthly). This allows the user to change the monthly deposit until the post-tax corpus matches with the target.

Download the Comprehensive Recurring Deposit Calculator

If you want to know more about annualised yield associated with a recurring deposit, check out this version:

This first appeared as a guest post in OneMint.

Here is a collection of good RD resources

Do share if you found this useful

Create a "from start to finish" financial plan with this unique open-source robo advisory software template


 Don't like ads but want to support the site? Subscribe to the ad-free newsletter! 
You will get the full post-ad-free delivered to your inbox for Rs. 3000 a year. Follow this link to read the terms and sign up! 


About the Author M Pattabiraman author of freefincal.comM. Pattabiraman is the co-author of two books: You can be rich too with goal based investing and Gamechanger. “Pattu” as he is popularly known, publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis, including a robo advisory template for use by beginners. Contact information: freefincal {at} Gmail {dot} com He conducts free money management sessions for corporates (see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints.

Content Policy

Freefincal has original unbiased, conflict-of-interest-free,  topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. No promotional content We do not accept sponsored posts and link exchange requests from content writers and agencies. This is our privacy policy Our website is non-profit in nature. The revenue from the advertisement will only be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.
Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media


Do check out my books


You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingMy first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.  It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantGamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

10 Comments

    1. Thanks. The choice does not exist! Like FDs, tax on RDs (NSCs) have to be paid on accrual basis. If paid on maturity it has to be paid with interest(due to delay!)

  1. I had covered this is my blog post at Overview of Recurring Deposits where I had given references to few links on net regarding tax on interest on RD Quoting from it :
    Interest on recurring deposits with banks will be charged to tax under the head ‘income from other sources’. Income under this head is to be computed based on the method of accounting regularly employed by the assessee being the cash or mercantile system of accounting. You have an option of choosing your method of accounting in respect of such interest income which is chargeable under the head ‘other sources’. The income will thus be taxed on the basis of such method which is chosen by you and is consistently followed.

  2. Dear Pattu,
    Even for an FD done say for 3 years, should i pay interest on Accrual Basis or at the end when i get money in my hand???
    Please clarify.

    Thanks,
    Sunil.

Leave a Reply

Your email address will not be published. Required fields are marked *