Understanding Bank Fixed & Recurring Deposits
A Fixed Deposit (FD) involves depositing a lump-sum amount for a fixed tenure at an agreed interest rate. A Recurring Deposit (RD) allows you to deposit a predetermined monthly installment, ideal for building capital systematically with zero market volatility.
Quarterly Compounding Math Formula
A = P × (1 + r / 4)(4 × t)
Where A is Maturity Corpus, P is Principal Deposit, r is Annual Interest Rate, and t is Tenure in Years.
Frequently Asked Questions
When is TDS deducted on FD/RD interest? ▼
Under Section 194A, banks deduct 10% TDS if interest income exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). You can submit Form 15G/15H if your total income is below the taxable exemption limit.
Is RD interest compounded quarterly in India? ▼
Yes. In India, most major commercial banks compound Recurring Deposit interest on a quarterly basis using the Indian Banks' Association (IBA) standard compound formula.