Investing in an RD is not eligible for a tax deduction under the Income Tax Act 1961. The interest on RD is subject to TDS @10% in case the PAN is furnished. In case the PAN is not furnished, the TDS increases to 20%. Further, the TDS is applicable if the interest earned exceeds Rs 40,000 (Rs 50,000 in the case of senior citizens). Lastly the interest will be classified as ‘Income from Other Sources’ and taxable at your applicable tax rate.