Rules & tax
Tax on Recurring Deposit Interest
RD interest is taxed at your slab rate — TDS threshold, accrual reporting, Form 121 (15G/15H) and deductions for seniors.
Updated 30 September 2026Highest RD rate now
7.25%
Bandhan BankWhat you need to know
RD interest is “income from other sources”, taxed at your slab rate each year as it accrues. Banks deduct 10% TDS once your total FD + RD interest from that bank crosses ₹50,000 in a financial year (₹1 lakh for senior citizens); without PAN the rate is 20%.
Tax rules
| Point | Rule |
|---|---|
| Taxability | Fully taxable at slab rate |
| TDS threshold | ₹50,000 per FY per bank (₹1 lakh for 60+), FD and RD combined |
| TDS rate | 10% with PAN; 20% without |
| Avoid TDS | Form 121 (from 1 Apr 2026; earlier 15G/15H) if tax on total income is nil |
| Deduction | No 80C benefit; seniors can claim up to ₹50,000 under 80TTB (old regime) |
| Reporting | Show accrued interest every year in ITR; claim TDS credit via Form 26AS/AIS |
Frequently asked questions
Is RD interest tax-free?
No. Only special cases like NRE deposits are tax-free.
Can I claim 80C on RD?
No. Only 5-year tax-saver FDs and the Post Office 5-year TD qualify among deposits.
For information and comparison only. Confirm rates and rules with your bank or post office.