How Much Tax is Deducted on RD?

Recurring Deposit (RD)
1

Can anyone here tell me how much tax on RD interest is deducted?

2

Just like bank FDs, RD is also subject to TDS deduction. Tax is deducted at the interest earned on RD. If your interest exceeds Rs. 10000 in a financial year, you will be liable for 10% TDS deduction.

In case you do not provide the bank with your PAN, the bank will deduct TDS at 20% on the interest earned on your recurring deposit.

Let me illustrate this with an example:

Assume that you earn an interest of Rs. 15000 on your recurring deposit in a financial year. This is how much tax on recurring deposit interest you’ll have to pay:

Taxable income earned as interest on RD = 15000-10000 = 5000.

  • If you have submitted PAN with the bank: 10% TDS on 5000, i.e. Rs. 500
  • If you have not submitted PAN with the bank: 20% TDS on 5000, i.e., Rs. 1000

Note that these calculations are for regular citizens.

If your total income in a financial year is below the taxable limit then you can submit Form 15G (for regular citizens) or Form 15H (for senior citizens) to avoid TDS deduction by the bank.

Hope this is helpful :slight_smile: