Calculate the maturity value of a monthly recurring deposit.
A recurring deposit takes a fixed monthly instalment for a set term at a stated rate, with interest typically compounded quarterly. It looks like a fixed deposit paid in instalments, and the rates are usually similar, but the return on the total amount deposited is noticeably lower. That is not a worse rate — it is a shorter average holding period.
The reason is simple once stated. In a twelve-month RD, your first instalment earns for twelve months but your last earns for barely one. On average, your money is invested for roughly half the term, so the total interest is around half what the same total lump sum in an FD would have earned over the full period. Neither product is better in the abstract: an RD suits money you do not yet have and builds the discipline of saving from monthly income, while an FD suits a lump sum you already hold. Tax treatment is identical — interest is taxable at your slab rate as it accrues, with TDS above the threshold.
You deposit ₹10,000 every month for 3 years in a bank RD paying 7% a year, compounded quarterly. You put in ₹3,60,000 in total and the maturity value is about ₹4,01,373, so you earn about ₹41,373 in interest.
That interest is less than 7% of ₹3.6 lakh for 3 years, because each instalment is invested for a different length of time. The first ₹10,000 earns interest for 36 months, but the last one earns it for only one month.
Last reviewed: 5 November 2026 by the YogiCalc team · How we calculate and verify · Spotted an error? Tell us
Because each instalment is invested for a different length of time. Your first deposit earns for the full term and your last for barely a month, so the average holding period is roughly half the term and the interest is correspondingly lower.
It depends on what you have. An FD suits a lump sum you already hold; an RD suits saving out of monthly income. Comparing their headline rates is fair, but comparing total returns without accounting for the different holding periods is not.
Yes, at your slab rate as it accrues, exactly like an FD. TDS applies once interest crosses the threshold, and TDS is not the final liability if your slab rate is higher.
Most banks charge a small penalty for each missed instalment and may close the account after repeated defaults. The maturity value is recalculated on what was actually deposited, so it falls short of the original projection.
An RD gives a fixed, guaranteed return, which suits short-term goals. A SIP in equity funds can grow more over the long term but its value goes up and down. Many people use an RD for goals under 3 years and SIPs for longer goals.
Yes. Under the Income Tax Act, 2025 the old Forms 15G and 15H were replaced by a single Form 121. If your total income is below the taxable limit and you meet the conditions, you can give Form 121 to the bank so it does not deduct TDS.