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  • Tax on Recurring Deposit Interest Rates

    If you are looking for a way to invest small amounts every month as opposed to investing a lump sum amount at once, recurring deposits are your answer. Recurring deposits are term deposits that let you deposit a sum of money every month for a fixed period of time, giving you interest rates that are similar to what you earn on fixed deposits.

    To open a recurring deposit account with any bank, you need to have a savings account with the bank whose recurring deposit scheme you have chosen. You can deposit the money in your savings account, which will be deducted every month by the bank and transferred to the recurring deposit account

    TDS on Recurring Deposit

    Tax on Recurring Deposit

    Similar to most personal savings instruments and fixed deposit, recurring deposits to, attract tax. However, recurring deposits attract TDS, better known as Tax Deducted at Source. TDS is also known as the income tax which is applicable for Indian citizens, under The Income Tax Act of 1961. These laws stay the same, except minor amendments and adjustments in the taxation slab.

    Income Tax on Recurring Deposit Amount

    The money that is invested in a recurring deposit every year, will be counted as a part of the yearly income of the investor. A TDS (Tax Deducted at Source) of 10 percent is deducted on the interest you earn on your recurring deposit. The TDS is not deducted if the interest you earn on your recurring deposit is up to Rs.10,000. The TDS will be 20 percent, if you fail to provide the PAN information to the bank.

    If their income falls under the non-taxable income slab, they still have to submit the Form 15G to be taxed for both fixed and recurring deposits.

    Form 15G Form 15H and Form 16A

    Form 15G is a must if you want to save taxation on your income. However, From 16A is a form that is filled and provided to you by your employer, who deducts the TDS from your income. Note, that regardless of being eligible for TDS on your income, you will be provided with the Form 16A. Also, keep it in mind that the Form 15G is applicable for people who are under 60 years of age. Form 15H is a similar form for ITR submission, like Form 15G, but is only meant for people who are 60 years and over (senior citizens).

    Current Income Taxation Slab 2017-18: Resident Individual Below The Age of 60 Years

    To get you knowing whether you need to furnish the Form 15G and submit it for your income tax, checkout the income taxation slab below:

    Income Taxation Slab 2017-18 for RD
    Annual Income (in Indian Rupees) Tax Rate TDS on Recurring Deposit Interest Earned (if interest is more than Rs.10,000)
    Less than Rs. 2.50 lakhs Not Applicable 10%
    Between Rs.2.5 lakhs and Rs.5 lakhs 5% of sum exceeding Rs.2.5 lakhs 10%
    Between Rs.5 lakhs and Rs.10 lakhs 20% of sum exceeding Rs.5 lakhs 10%
    Over Rs. 10 lakhs 30% of sum exceeding Rs.10 lakhs 10%

    * As of April, 2017

    Surcharge:

    10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore.

    15% of income tax, where total income exceeds Rs. 1 crore.

    Recurring Deposit Tax Exemption

    There are certain instruments that are categorized as recurring deposit with income tax exemption, although rare. People do look for tax saving recurring deposits to make sure that their savings are not wasted. Unfortunately, very restricted amount of information is available on recurring deposit interest is taxable or not.

    For Example – Say you earn an interest of Rs.20, 000 on your recurring deposit for a year and your annual income is Rs.3, 00, 000. This means you are liable to pay an income tax of 10 percent on Rs.50, 000 (No tax up to Rs.2.5 Lakhs), which amounts to Rs.5000 and TDS of Rs.2000 is deducted on the interest earned on your recurring deposit. So, at the end of the year you have to pay Rs.3000 to the government as income tax. The bank will give you a TDS certificate proving that you have paid the Rs.2000 to the government already.

    Read More Article on Recurring Deposit

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    Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar’s partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.

    News About Tax on Recurring Deposit Interest Rates

    • EPFO Has Cut the Interest on EPF to 8.65%

      The Employees Provident Fund Organisation has made a small cut in the interest on EPF to 8.65%. EPFO invests 65% of its funds in government securities. Besides the tax free status, the interest rates offered by EPFO are higher compared to other zero-risk investment schemes. PPF has similar tax free status, and offers 8% rate of interest. Most bank deposit schemes like that of a 1-year post-office deposit, offer up to 5.6% interest rate, and the earnings are taxable. While a 5-year NSC offers 6.4% interest rate p.a, the earnings are taxable. NSC also offers tax benefits under Section 80C. Some believe that the Finance Minister could consider revising tax benefits for investment products in the new budget.

      22 December, 2016

    Recurring Deposit - Sitemap

    RD Reviews

  • Page 1 of 2 1 2
    • Karnataka Bank Recurring Deposit
      "Good service"
      KARNATAKA BANK
      0.5 3.5/5 "Pretty good"
      Karnataka bank is giving good service for the recurring deposit . There is no annual charges for the account They are going quiet good response . Am getting income tax benefits too . Overall its average investments plan . It has some nominal good returns.
      Was this review helpful? 0
      , bangalore
      Reviewed on Nov 02, 2018
    • SBI Recurring Deposit
      "Excellent in service , hike in interest rate"
      STATE BANK OF INDIA
      0.5 5.0/5 "Blown Away!"
      I have invested in recurring deposit and the return value is good based on the pre tax which was levied and it was levied based on certain circumstances. I would like to say that the customer service is good one with them, also I really dont have any issues on it.
      Was this review helpful? 1
      , bangalore
      Reviewed on Nov 16, 2017
    • SBI Recurring Deposit
      "Recurring deposit"
      STATE BANK OF INDIA
      0.5 4.0/5 "Great!"
      Every 6 months the money would get debited from my salary account and would get transferred to Recurring Deposit. Its mainly because I have opted for a AUTO PAY. Interest rate offered by 6.25% no tax benefits i guess.
      Was this review helpful? 4
      , vadodara
      Reviewed on Sep 23, 2017
    • HDFC Bank Recurring Deposit
      "RD is also good"
      HDFC BANK
      0.5 5.0/5 "Blown Away!"
      HDFC RD is also very good. There is an option here, where one can transfer the funds on a monthly basis. Interest rate is one and the same as FD. I had given auto debit options where the funds would be transferred from my account to this RD. I dont get any tax benefit here and its a short term RD.
      Was this review helpful? 1
      , jaipur
      Reviewed on Sep 12, 2017
    • Central Bank of India Recurring Deposit
      "Recurring deposit is fine"
      CENTRAL BANK OF INDIA
      0.5 5.0/5 "Blown Away!"
      Central bank provides very good service and support . I am holding this RD for the past 3 years. Here I got the best rate of interest and I also get some tax benefit here. Interest what I earn is on a monthly basis. I have not experienced any thing negative with them.
      Was this review helpful? 13
      , coimbatore
      Reviewed on Jan 13, 2017
    • Lakshmi Vilas Bank Recurring Deposit
      "Trusted and across all the genreations and where LVB serve "
      LAKSHMI VILAS BANK
      0.5 5.0/5 "Blown Away!"
      I had opted for LAKHSMI VILAS BANK with Recurring deposit. I had opted for a compounded interest rate. The interest rate is as same as FD. I also get some tax benefits too. The minimum days is 10 and the maximum is 10 years.
      Was this review helpful? 2
      , warangal
      Reviewed on Nov 11, 2016
    • HDFC Bank Recurring Deposit
      "My recurring deposit"
      HDFC BANK
      0.5 4.0/5 "Great!"
      I had opened a Recurring deposit with HDFC Bank last year December. I earn good interest rate on my RD which is 7.5%. I dont get any sort of tax benefits from them.I am supposed to pay about rs 5000. I had opted for this RD through online and I am not sure about the minimum amount which needs to be deposited.
      Was this review helpful? 13
      , mumbai
      Reviewed on Oct 25, 2016
    • ICICI Bank Recurring Deposit
      "Very good"
      ICICI BANK
      0.5 4.0/5 "Great!"
      I had opted for ICICI recurring deposit it is a got very good options in it. I am holding this ICICI RD for a period of 6 months. I dont have any idea about the interest that I earned on this RD. I had closed it because I had some personal commitment I could take it further. Yes, I do get tax benefit for this.
      Was this review helpful? 6
      , bangalore
      Reviewed on Oct 01, 2016
    • IDBI Recurring Deposit
      "My RD"
      IDBI BANK
      0.5 4.0/5 "Great!"
      I decided to part some amount in RD with IDBI Bank. I normally deposit rs 1800 and there is no bench mark for the maximum amount. I get tax benefit . Interest rate that I earn on my RD is reasonable. Through the branch this RD was set up and my RD is 3 months old.
      Was this review helpful? 2
      , jamshedpur
      Reviewed on Sep 24, 2016
    • Canara Bank Recurring Deposit
      "Excellent "
      CANARA BANK
      0.5 5.0/5 "Blown Away!"
      I have invested in retail investment scheme of Canara Bank, where it is giving 8.5% interest rate for Recurring deposit for the lock in period of 5 years. I have taken the flexible plan in which I get the income tax benefit. There is no activation charges. The minimum amount to invest is Rs.1000. We can avail the facility through the online. We can liquid the cash any time without any charges through online itself.
      Was this review helpful? 8
      , bangalore
      Reviewed on Jun 16, 2016
    • SBI Recurring Deposit
      "My RD account"
      STATE BANK OF INDIA
      0.5 3.5/5 "Pretty good"
      SBI Recurring Deposit is fine. I normally deposit certain amount to that account. I prefer using internet banking for the same. There is no option where we can deposit a lesser amount however the monthly amount can be increased. I dont get any tax benefit. When it comes to liquidation I have been to the branch personally and I have completed the formalities. This RD is one year old.
      Was this review helpful? 10
      , bangalore
      Reviewed on Apr 18, 2016
    • SBI Recurring Deposit
      "Its fine"
      STATE BANK OF INDIA
      0.5 3.0/5 "Satisfactory"
      My opinion about SBI RD Is fine. The reason why I had chosen SBI was, I am holding an account with SBI for quite some time now for more than 20 years and that is why I had chosen SBI for the RD. This SBI bank is next to my place and I am getting tax benefits as well.
      Was this review helpful? 0
      , bangalore
      Reviewed on Dec 10, 2015
    • HDFC Bank Recurring Deposit
      "Can be better"
      HDFC BANK
      0.5 4.0/5 "Great!"
      HDFC RD is fine its good to go. Its like a good deposit and all. HDFC Bank is behind me for RD . They called me and they made to invest here. No one contacted me for that. I am holding this RD with HDFC BANK FOR 2 years and now its closed. Nothing interesting it provides the minimal interest rate and no tax benefits
      Was this review helpful? 0
      , hyderabad
      Reviewed on Nov 25, 2015
    • ICICI Bank Recurring Deposit
      "Very good"
      ICICI BANK
      0.5 5.0/5 "Blown Away!"
      I am holding this ICICI RD and it was very good. I have been using it for the past few years now. Interest rate offered by them was good and I have reopened this RD through online and mine is a I Wish account. I normally invest money . There is no need for me to deposit money which I am supposed to maintain and there is no tax benefit as well.
      Was this review helpful? 0
      , new delhi
      Reviewed on Oct 15, 2015
    • Kotak Recurring Deposit
      "Always..good for me...."
      KOTAK MAHINDRA BANK
      0.5 4.0/5 "Great!"
      For the first year Kotak bank offered 9.5% interest. After the deductions of tax I am getting 6.5% interest for my Recurring deposit. I am maintain this account for the past 1.6years. Customer service really good I would say they are very supportive.
      Was this review helpful? 1
      , bangalore
      Reviewed on Oct 12, 2015
    • HDFC Bank Recurring Deposit
      "Service feedback "
      HDFC BANK
      0.5 4.0/5 "Great!"
      HDFC recurring deposit is fine. Its a savings account where we can save money in a short span of time. I am holding this RD for a period of 8 months. The total tenure is 15 months and the interest rate depends on the tenure and there is no tax benefit .
      Was this review helpful? 0
      , bangalore
      Reviewed on Oct 05, 2015
    • HDFC Bank Recurring Deposit
      "Service feedback "
      HDFC BANK
      0.5 4.0/5 "Great!"
      HDFC recurring deposit is fine. Its a savings account where we can save money in a short span of time. I am holding this RD for a period of 8 months. The total tenure is 15 months and the interest rate depends on the tenure and there is no tax benefit .
      Was this review helpful? 0
      , bangalore
      Reviewed on Oct 05, 2015
    • HDFC Bank Recurring Deposit
      "GOOD PROFIT"
      HDFC BANK
      0.5 4.0/5 "Great!"
      I opened an recurring deposit account with HDFC bank very recently. Since I am having all my transactions with them wanted to open an recurring deposit account. I have completed 11 months now. This account helps to reduce tax charges for all the customers.
      Was this review helpful? 1
      , chennai
      Reviewed on Sep 28, 2015
    • HDFC Bank Recurring Deposit
      "Its not a good one"
      HDFC BANK
      0.5 3.0/5 "Satisfactory"
      HDFC RD Is a flexible one it is not that good. I am holding this RD for a period of 6 months. The specialty of this RD I guess its a fixed one and it provides very good options . I can opt for ECS or S/O . They are providing tax benefits as well.
      Was this review helpful? 0
      , chennai
      Reviewed on Sep 09, 2015
    • HDFC Bank Recurring Deposit
      "Good one"
      HDFC BANK
      0.5 4.0/5 "Great!"
      I am holding a HDFC RD account. I can do everything online. There is a fixed amount which I have to deposit I normally pay about rs 1000 which is the minimum amount every month. I am not getting any tax benefit. This was taken for a period of 2 years. Online I can view how much interest I have earned. I can close this account when ever I want.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 24, 2015
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