RD Calculator - Calculate Recurring Deposit Interest Rates

Recurring deposits are a kind of term deposit where individuals can make regular monthly payments into an RD account for a predetermined period and earn interest, which is almost as high as fixed deposits. When the deposit matures, the account holder stands to receive a lump sum amount - which is the principal and accumulated interest. The interest rate assessed at the beginning remains the same throughout the term of investment. Thus, it is easy for individuals to estimate their potential earnings from investments in RDs.

Recurring Deposit Calculator is an online facility provided by most banks where individuals can calculate the maturity amount that they stand to receive on parking money into the bank's RD account. Prior to depositing any amount in an RD account, individuals are advised to make use of this online tool. They can compare the maturity value of the deposited amount with different banks and accordingly make an informed decision about which bank to go ahead with.

To find out the maturity amount on an RD account using the calculator, an individual will have to input certain details. The information required to determine the maturity amount would include - amount of deposit, type of customer, the date of opening RD and due date of RD. The tool will have already mentioned the interest rate applicable on the deposit. After filling in the necessary details, one needs to simply click on the ‘Submit’ button and the page will display the total savings and interest earned.

According to Section 194A of the Income Tax Act, 1961, "Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income [by way of interest on securities], shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force" Thus, it can be concluded that the interest earned on recurring deposit is taxable. It has to be added to ‘income from other sources’ while filing IT returns.

Until May 2015, banks did not deduct tax on the recurring deposit interest. However, from June, 2015, a TDS of 10% is deducted on the interest accrued on a RD account. This TDS will only be deducted in case the total interest is greater than Rs. 10,000 in a single financial year. If the interest does not exceed Rs. 10,000, then there is no TDS deduction.

In the event that an accountholder's total income does not fall under the tax slab, the individual can submit Form 15G (for normal citizens) or 15H (for senior citizens) to the bank. Both of these forms are valid for one financial year. This means that the individual will have to submit these forms every year, if he or she is eligible. By submitting them as soon as the financial year begins, one is essentially ensuring that the bank does not deduct any TDS on the interest income.