Recurring Deposits
A Recurring Deposit (RD) builds a lump sum through fixed monthly instalments over a fixed tenure (6 months to 10 years), at an interest rate aligned with FD rates for the same tenure and compounded quarterly, paid out at maturity. This guide covers missed-instalment penalties, premature closure (typically at a reduced rate, and generally all-or-nothing unlike some FDs), and Flexi RD variants allowing variable instalment amounts. On tax: RD interest is fully taxable at slab rate, with TDS under Section 194A now triggered above ₹50,000 (₹1,00,000 for senior citizens) per bank for FY 2025-26 onwards — Form 15G/15H can avoid the upfront deduction where total income is below the taxable threshold. We draw a clear RD-vs-SIP comparison: an RD is a fixed-rate, DICGC-insured (₹5 lakh per depositor per bank), fully-taxable-at-slab-rate promise, while a SIP into mutual funds is market-linked with potentially more favourable capital gains tax treatment (per tackl.finance’s mutual funds note) — making RDs better suited to short-horizon, certainty-driven goals and SIPs better suited to long-term wealth building.