Question 1

What is a Recurring Deposit (RD)?

Accepted Answer

A Recurring Deposit is a savings instrument where you deposit a fixed amount every month for a predetermined period. Interest is compounded quarterly and the maturity amount includes all deposits plus accumulated interest.

Question 2

How is RD interest calculated?

Accepted Answer

RD interest is calculated using quarterly compounding. Each monthly installment earns interest from the date of deposit until maturity, and the interest is compounded every quarter.

Question 3

Is RD interest taxable?

Accepted Answer

Yes, RD interest is fully taxable as per your income tax slab. If the total interest earned exceeds Rs 40,000 (Rs 50,000 for senior citizens) in a financial year, TDS at 10% is deducted by the bank.

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