Guide · India · Recurring deposits
RD interest is taxable — TDS is only part of the story
Your bank quotes a nominal annual rate. The income-tax return cares about interest accrued/credited in the year, your slab, and whether TDS covered the full liability.
Model post-tax yield: RD calculator · compare with FD calculator for lump-sum behaviour
Disclaimer: TDS thresholds and senior-citizen rules change in Finance Acts — confirm current limits on official sources.
Interest is generally “income from other sources”
Unlike PPF/SSY’s exempt structure, typical RD interest is taxed. Your marginal slab sets the real bite — not the brochure rate.
TDS vs total tax
Banks may deduct tax at source when interest crosses prescribed thresholds in a financial year. If TDS is lower than your true liability, you still owe the balance; if higher, you may claim a refund via your return. Either way, post-tax yield is what you keep.
Inflation still applies
After tax, ask whether the remaining return beats the inflation relevant to your goals. RDs can be useful for discipline and capital safety — the insight is to avoid confusing nominal maturity with purchasing power.
Missed instalments
Penalties and lost compounding on skipped months are separate from tax but equally real. If your cashflow wobbles, size the RD so you can finish it cleanly.