Now a day’s interest rates are very fluctuating and RBI recently change the bank rate. So many people want to lock their money by depositing in the banks. But always there is a choice of fixed deposit or recurring deposit.
When we compare both of them, both have some advantages and disadvantages too. Like in fixed deposit, the interest income is always high compare to recurring deposit. Whereas recurring deposit has no TDS rule. Some of the features of fixed as well as recurring deposit are as follows.
- Always give higher return compare to recurring deposit as you need to lock the entire amount in starting and all the amount fetch interest.
- The longer the amount, maximum the interest income.
- TDS will deduct if the interest income exceeds Rs. 10000 in a year. Investor will get the balance amount after deducting tax deduction at source.
- FDs are always advised when you have cash in hand.
In this scheme a fixed amount needs to submit in the account like the EMI and after the tenure, you will get entire amount with compound interest. Features are as follows.
- Both fixed deposit and recurring deposit gives same rate of interest on deposits.
- No TDS deduction.
- However the interest earned is not tax free and always taxable.
- It is advisable when one can save a certain amount every month and has not big cash in hand.
Interest calculation is as follows in this sheet.
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