Recurring Deposit in India — RD vs SIP, Tax Implications, and Which Banks Offer the Best Rates

## What is a Recurring Deposit? An RD is a term deposit where you commit to depositing a fixed amount every month. At the end of the tenure, you receive your principal plus compounded interest. It's the simplest form of disciplined savings. ## Current RD rates (2024–25) - State Bank of India: 6.5–7.25% (varies by tenure) - HDFC Bank: 6.5–7.25% - ICICI Bank: 6.5–7.0% - Small Finance Banks (ESAF, AU): up to 8–8.5% - Post Office RD: 6.7% (guaranteed by government) Note: Rates change frequently. Verify on the bank's official website. ## Tax-efficient alternatives to RD The main downside of RD is that interest is fully taxable. If you're in the 30% bracket, a 7% RD effectively returns only ~5%. Consider: - **Debt mutual funds**: Gains taxed as per slab after 3 years (same as RD), but potentially higher returns - **PPF**: Tax-free returns, but 15-year lock-in - **Sukanya Samriddhi**: For girl children — 8.2% tax-free, but restricted withdrawal ## RD for senior citizens Most banks offer 0.25–0.5% additional interest for senior citizens on RDs, which combined with the higher TDS threshold (₹50,000 vs ₹40,000) makes RDs particularly attractive for retirees in lower tax brackets.