How to avoid TDS on Recurring deposit (RD)?


Recurring Deposit is one of the popular form of term deposit in India. Earlier TDS (Tax deducted at source) was not applicable to Recurring deposits but 2015 union budget proposed all the term deposits (including RD, FD etc) would cover under TDS and 10% of the interest earned will be deducted under Section 194A.

This new change will take effect from 1 June 2015. Same like FD no TDS will be deducted on interest earned up to Rs. 10,000 for recurring deposits, and for the company FD no TDS for the interest earned up to Rs 5,000.

Till last year, the investors had the option to open FDs at multiple branches of a same bank to avoid TDS, but budget proposed that combined interest earned from all branches of a same bank exceeds Rs 10,000 in a year would fall under TDS deduction.  tds

Ways to avoid TDS on recurring deposit and fixed deposits

  1. Open deposits in family member’s names: Open deposits in the name of your parents, wife etc. (whose tax slap is Nil) to avoid TDS deduction.
  2. Open deposits in multiple banks: One can open RDs in different banks, for example if a investor is plan to invest 1 lakh in a year, he can choose two different banks to invest Rs. 50,000 each
  3. Form 15G/15H: Investors can submit Form 15G, if the total income is below the basic tax exemption limit, then the Bank would not deduct any TDS on the interest. Senior Citizen’s whose estimated income is nil even though the total income from various deposits may exceeds the tax limit, can submit form 15H to avoid TDS deduction.

How to claim refund on RD and FD’s TDS deduction

If Investor has nil tax liability, then he/she can claim the refund by filing the income tax return, currently there is no separate application form for this. An Investor needs to attach the proof for the deducted TDS amount for tax refund. 


If you have any doubts regarding Recurring Deposit, kindly leave as comments. We would try our level best to address those.

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  1. Saurabh says

    While filling 15g form for recurring deposit how to calculate interest (the value for which the 15g is being filled). My bank (ICICI) doesnt account for interest from recurring deposit while calculating total interest (they account for only fixed deposits). Would that cause me a problem when i go ahed to fill another 15g form as i would not know interest from RD.

  2. SADHANA Barman says

    My salary is 2. 4 lac pa I have an RD account of 2500 per month, also I have few other deposit accounts am I eligible to submit form 15g to my RD account.

  3. Shruthi says

    I have filed my return way back in Sept and upon RD closure it was identified that my PAN details were not updated on the bank’s system. TDS is deducted at 20%. What is the procedure for collecting refund on TDS?

    1. Mohammad Ali says

      Hello Shruthi,
      In such cases tax would be refunded to you.
      1. Fill your income tax return form in the normal way
      2. Show Interest earned for Financial year as Interest income in Income from other sources
      3. Show TDS deducted in TDS section
      4. Then when you calculate tax due it would show up as Tax refund

  4. sili says

    i have rd of 5years in it is in 3rd year and amount is 15000 will i hv to fill the 15 g age is 30 yrs

    1. Parvati says

      I opened an rd account in 2013 for 5 year Rs 5000 thousands per month i’m housewife what should I do to avoid tds. Is rd interest is divided by 5year.or tds will be deducted on total interest on rd

  5. Adi says


    I have opened RD account and paying Rs.2000/ per month for 12months tenure. My income is less than 2.5lpa but still bank is deducting TDS for RD matured amount. Are they actually supposed to deducted TDS for it?

    1. Mohammad Ali says

      You need to submit Form 15G, if the total income is below the basic tax exemption limit, then the Bank would not deduct any TDS on the interest.

  6. Rajiv says

    Hello Sir,

    I have a query, If i open a RD and a FD in a same account and the combined interest of both RD and FD gets more than 10k. In this case also would interest earned be taxable?

    1. Mohammad Ali says

      Combined interest earned on RDs or FDs is taxable under ‘Income from other sources’ if it is more than 10K.

  7. Sandeep G says

    Hi Mohammad Ali,

    Thank you for the valuable information provided. I have a doubt regarding Tax on interest earned on Recurring Deposit with “India Postal”.

    I understood that from 2015 budget, Govt started tax on RD as well, both in Banks & Post Office. But what about the RD accounts opened in Post Offices before 2015 which goes for 5 years term generally.

    Say for example: if I have opened a Post Office RD account in 2012 (in 2012 there is no rule for TDS on RDs?), this RD account will be completing 5 years in 2017. But now in 2017, there is TDS rule for RDs. My doubt is whether TDS is still applicable for Postal RD accounts opened before 2015 also? or only new RD accounts which are opened after 2015? Please advise.

    Thanks in Advance.

    1. Mohammad Ali says

      Hello Sandeep,
      After 2015, any interest income earned is taxable on these deposits too. So, whether you invest in FD, RD or any tax-saver post office schemes, remember to include the interest income while filing tax returns.
      The only case in which you don’t have to pay income tax on RD is if you have no other source of income and your income is below the threshold taxable limit.

      I hope this will clear up your question sufficiently

  8. KSR LALITHA says

    What about interest received on RD account which is opened in the name of Minor and Guardian has given Form 15G.

    1. Mohammad Ali says

      Hello Lalitha, Interest on RD income received by a minor is also taxable. However, such interest income cannot be taxed to children and minor and hence the parents have to pay tax on them

  9. Dattatray says

    My annual income is not taxable still TDS has been deducted from FD RD. How can I claim a refund of the same ?

    1. Mohammad Ali says

      Hello Dattatray, you need to submit Form 15G/15H if your total income is below the basic tax exemption limit to avoid the TDS deduction.

  10. Ayesha says

    I have created a RD for rs.3000 per month for 12 month.Am I liable to TDS?

  11. Riya says

    I have created a rd of Rs. 5000 per month for 10 years. Am I liable to tds?

  12. Vamseekrishnakapuluru says

    Hi am vamseekrishnakapuluru started Recurring deposit with 10000 for 10 years. Will the TDs deduction in my account. Please suggest.

  13. Sumit says

    Hi, When to submit the 15G/H form?

    1. Mohammad Ali says

      Hi Sumit, Form 15G and Form 15H should be submitted at the beginning of each financial year or at the time of deposit to avoid a situation where it is already deducted.

  14. SK MAURYA says

    The TDS is applicable on total intrest or the intrest amount above Rs 10000 only in case of RD. If i surrender my RD of Axis bank in premature,is there any penalty for that. If yes how much? SK MAURYA

  15. Rishann says

    Hi Ali,
    Is tds deducted from total interest earned with FD and RD together or fd different and Rd different? Please reply if you understood the question. If you didn’t ask me and I will explain in detail.

  16. Rajandeep says

    Hi Ali,

    Thanks for the information. Earlier as i understood we could save TDS when investing with multiple banks, but now i guess every account being linked with PAN, interest earned reflects in Form 26. So saving TDS by investing in multiple banks aint a option anymore. Please correct if m i am wrong,


    1. Mohammad Ali says

      Yes Rajandeep, you are right. Saving TDS by investing in multiple banks is out of equation now.

  17. yash says

    sir i have rd account in name of my parents 10000/- for three years but i have no PAN no is it compulsory
    last month (2 year complete) bank deduct tax how can avoid tax.

    1. Mohammad Ali says

      Hi Yash, Submit form 15H for senior citizens, those who are 60 years or older to avoid TDS

  18. Ritik says

    Hi, i’m student of age 20 . I have Recurring Account with interest more than 10,000/- .I didn’t pay any type of tax . Will TDS deduced from my account?

    1. Mohammad Ali says

      It does not depends on the interest earned, but your overall income. If your overall income is below the taxable limit, you dont need to pay the tax but you need to submit Form 15 G / 15 H to inform your bank that your final estimated total income calculated as below the taxable limit.

  19. jk says

    I got TDS deducted in RD for interest of just Rs.1700/- only. 10% amount deducted. Really confused with the rule on Rs.10,000/annum. Could you clarify?

  20. Mahesh says


    What I understand from your article is that there is no TDS if the total interest earned is below 10K/annum. One needs to fill-in Form 15G/H only if the total income (from all sources) is below the taxable income.

    Am I right?


    1. Mohammad Ali says

      yes Mahesh, you are right 🙂