Post Office Recurring Deposits - Interest Rates, Meanings, Benefits, And Other Information
Published On Feb 08, 2022 10:00 AM By InsuranceDekho
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The Government of India supports a total of nine savings initiatives, one of which is the Post Office Savings Scheme. The Post Office Recurring Deposit is a medium-term savings plan that requires depositors to keep their money for at least 5 years. So because recurring deposit is not subject to market fluctuations, it is considered risk-free and is suitable for investors with a low risk appetite as well as those who are making their first investment in a programme. The recurring deposit system calls for a certain amount to be transferred into the bank at regular periods, with interest accumulated and compounded quarterly.
The Post Office RD will be a good investment for those who value security in their investments and want to make a consistent amount of money in return. Furthermore, this plan would be useful to persons who want to earn a predetermined amount of money over duration and earn a stable income. To understand and know more on the Post Office Recurring Deposits (RD), read on.
Eligibility Criteria Of Post Office Recurring Deposits (RD)
The following are the essential requirements for opening an RD account at a Post Office -
- Applicants must be Indian citizens and over the age of 18.
- Minors who have reached the age of ten.
- Parents/guardians of minors can establish an account on their behalf.
- The RD account for minors will be mainly held by the guardians or parents, while the account for applicants above the age of 18 would be kept in the name of the principal applicant.
What Is The Interest Rate In Post Office Recurring Deposits (RD)?
The Post Office Recurring Deposit has an interest rate of 5.8%, making it one of the best investment alternatives for consumers. One of the scheme's biggest benefits is compound interest, which is computed every quarter. Individuals can have a substantial corpus at their disposal when they reach adulthood, which will aid in financial stability and wealth building in the long run.
Features Of Post Office Monthly Recurring Deposits (RD)
Following are some listed features of Post Office Recurring Deposits -
1. RESTRICTIONS ARE MINIMAL - Investors can start an RD account with as little as Rs.10 per month and no maximum amount. Applicants can deposit cash or a check into their RD account at a post office while opening it.
2. OPERATIONS - If a Post Office RD has been opened in the name of a minor, the RD can be operated jointly. The account can be operated by two people. If the account is opened by a person over the age of 18, the account can be administered solely or jointly by the principal applicant.
3. NOMINATIONS - Applicants can name a nominee to receive the compensation in the event of their death. During the account opening process at the post office, investors can select the nomination option. They can do so even after the account has been opened.
What Is The Taxation Rate In Post Office Recurring Deposits (RD)?
Clause 80C of the Income Tax Act exempts the Post Office RD account from tax deductions, and individuals can claim a tax exemption of up to Rs.1.5 lakh per year under this section. The interest earned through the Post Office RD, on the other hand, will be subject to tax reductions. Account holders will have to pay tax on the interest amount according to their income tax bracket. Apart from that, any interest amounting to more than Rs.10,000 would be subject to TDS deductions, with persons having an active PAN card needing to pay TDS at a rate of 10% and those without an active PAN card required to pay TDS at a rate of 20%.
The post office banking service provides a variety of safe investing options. All of these projects are guaranteed by a sovereign guarantee, implying that they are government-sponsored. As a result, these programs are safer investment alternatives for people than company shares and so many fixed-income options.
Do read - Mutual Funds, Fixed Deposits, Recurring Deposits - Where Should I Invest My Money ?
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.