If you deposit money in recurring deposit then know these rules, otherwise there will be loss. - Newztezz Online

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Tuesday, January 30, 2024

If you deposit money in recurring deposit then know these rules, otherwise there will be loss.


Since RD is a means of earning, it also comes under the purview of income tax. Therefore, if you earn from RD, you should also know the rules related to income tax. If you know and follow the rules, the chances of getting trapped will be less. Otherwise who knows, you may become a victim of income tax notice.

Like fixed deposit, recurring deposit RD is also a better means of investment. By depositing some money every month, you can eventually add up to a good amount. When RD is a means of earning then it will also come under the purview of income tax. Therefore, if you earn from RD, you should also know the rules related to income tax. If you know and follow the rules, the chances of getting trapped will be less. Otherwise who knows, you may become a victim of income tax notice. RD account can be opened in bank as well as post office. Same method to open account. There may be some difference in the interest received. Also, whether you open RD in post office or bank, the rules of income tax are the same. If you have started RD scheme in the post office, then you can avail tax exemption under section 80C. You can avail tax exemption by showing an investment of Rs 1.5 in the Income Tax Return ITR.

This is how you can take advantage of the discount

There is also a rule to show Rs 1.5 lakh and get discount. This discount is available only on the amount deposited. If you have earned interest in RD scheme then it will come under the ambit of tax. Income tax will have to be paid according to the tax category you fall in. If more than Rs 10,000 is earned as interest from RD in a year, then TDS will have to be deducted on it. Those who have a PAN card and it is active, then TDS will be deducted at the rate of 10 percent on the interest on RD. Those who do not have PAN card, their TDS will be deducted at the rate of 20 percent.

This benefit is available on post office RD

Many types of rebates or discounts are also available on post office recurring deposits. This rebate can be taken in the form of discount which is given by the post office to the holder of the scheme. This discount is given so that the account holder pays his installment on time. However, this rebate is available only to those customers who have paid their installment in advance 6 months in advance. That means, if you pay the next installment 6 months in advance, then the benefit of discount is given by the post office.

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