Recurring Deposits (RD) is a special kind of term deposit offered by Indian banks which help public with regular incomes to deposit a fixed amount every month and earn interest at the rate applicable to fixed deposits. Recurring Deposit is similar to making fixed deposits of a certain amount in monthly installments and provides customers with the flexibility to invest an amount of their choice each month and save money with ease. Recurring Deposit matures on a specific date in the future along with all the deposits made every month and offers you a fixed interest on the invested amount at a specific frequency till the pre-determined term or up on maturity.
How To Open Recurring Deposit Account:
How To Open RD Account Online:
- Open an RD account online via net banking.
- Select the option to open a new recurring deposit account.
- Choose Senior citizen option if you are eligible.
- Fill the nomination details.
- Submit it and the bank debits your account.
How To Open RD Account Offline:
- Go to the bank branch and fill up a form for opening a recurring deposit account.
- Provide your KYC documents along with the account opening form and other details.
- Submit it to the bank along with a cheque for the installment amount.
Recurring Deposits (RD) Scheme 2022 – Guaranteed Return, Tax Benefits, Partial Withdrawal, High Interest Rate, Premature Withdrawal, Notification, Apply Online
Recurring deposit schemes offer customers a chance to build up their savings through regular monthly deposits of a fixed sum over a fixed period of time. Recurring deposit accounts are provided by most of the banks and NBFCs in India with tenures ranging from six (6) months and the maximum is ten (10) years. Recurring Deposit schemes target to inculcate a regular habit of saving among the public and provide usually ranges from 2.90% – 7.25% interest rate per annum for general citizens and Senior citizens are offered additional interest in the range of 0.50% to 0.80% on all deposit tenures.
Recurring Deposits (RD) Scheme 2022 Details – Eligibility, Required Documents, Premature Withdrawal
- Recurring Deposit Eligibility:
- Any individual.
- Minor who is above 10 years of age is eligible to open a recurring deposit account, if minor below or equal to 10 years of age under the guardianship of natural or legal guardian.
- Any government organisation and corporate, company, proprietorship or commercial organisation are eligible for Recurring Deposit.
- Recurring Deposit Documents:
- Application form.
- Passport size photographs.
- Identity proof and address proof.
- KYC documents (if the bank requests for it).
- Premature Withdrawal:
- The bank levied 1% penalty for premature withdrawal recurring deposit and interest rate offered by banks varies as per bank stipulations.
- In the bank in case of premature withdrawal some banks would deduct interest rate by 1% to 2% for the period during which the deposit remained.
- Premature withdrawal is made before lock-in period for an RD account is 3 months, the account holder would earn zero interest and only the principal amount that was deposited would be refunded to him/her by the bank.
Recurring Deposit Tax Saving:
- Individuals who are earning less than Rs. 2.5 Lakh per annum, the TDS applicable is 10% of the interest earned on the recurring deposit account if the interest earned on the principal amount exceeds Rs.10,000.
- Individuals who are earning an annual income ranging between Rs.2.5 Lakh to Rs.5 Lakh, the TDS applicable is 10% of the total income earned as interest on the principal amount in the recurring deposit account although it should exceed Rs.10,000.
- Individuals who are earning an annual income ranging between Rs.2.5 Lakh to Rs.5 Lakh, the TDS applicable is 10% of the total income earned as interest on the principal amount in the recurring deposit account although it should exceed Rs.10,000 than income tax to be paid by the person earning an annual income is 20% of the total income and bank will deduct only 10% TDS which means when the person files the ITR, tax has to be paid at the rate of 10.3%.
- Individuals who are earning an annual income ranging between Rs.2.5 Lakh to Rs.5 Lakh, the TDS applicable is 10% of the total income earned as interest on the principal amount in the recurring deposit account although it should exceed Rs.10,000, than income tax to be paid by the person earning an annual income is 30% of the total income and bank will deduct only 10% TDS which means when the person files the ITR, tax has to be paid at the rate of 20.6%.
Recurring Deposits (RD) are an investment scheme almost similar to fixed deposit but you have to make fixed monthly deposits in RDs, unlike a lump sum amount in FDs. The government started Recurring Deposits with objective to create a habit of regular investment among earning individuals.