What Is Recurring Deposit (RD)? Complete Guide
A Recurring Deposit (RD) is a savings scheme where you invest a fixed amount every month for a set tenure and earn interest on it.
How RD Works
You deposit a fixed amount monthly. Interest is compounded quarterly in most banks. At maturity, you get your deposits plus accumulated interest.
RD vs FD
FD requires a lump sum upfront while RD lets you invest monthly. FD generally gives slightly higher returns because the full amount earns interest from day one.
Tax on RD
RD interest is fully taxable. TDS is deducted if interest exceeds ₹40,000/year (₹50,000 for seniors). You must declare all RD interest in your ITR.