Post Office Recurring Deposit Account – RD
Table of Contents
What is Recurring Deposit Account – RD
Recurring Deposit Account – RD is a facility to deposit fixed amount at regular intervals to generate forced savings and generate incomes. The investment can be done at India Post Offices.
What is the interest rate on RD
- Interest rate is 5.8% per annum (compounded quarterly) wef 01.04.2020
Tax benefit of investing in Recurring Deposit Account – RD
- The interest amount is subject to tax.
- Amount invested in RD is not allowed as deduction under section 80C.
RD Investment amount
- Minimum amount Rs 100/- and in multiple of Rs 10/-
- No upper limit or maximum amount
Salient features of RD
- Account may be opened by
(i) a single adult
(ii) Joint Account (Maximum 3 adults)
(iii) Minor above 10 years of age
(iv) A guardian on behalf of a minor/Person of unsound mind - Account can be opened by cash / Cheque and in case of Cheque the date of deposit shall be date of clearance of Cheque
- Nomination facility is available at the time of opening and after opening of account
- Premature closure is allowed after three years from the date of opening of the account and interest at the rate applicable from time to time to the Post Office Savings Account shall be payable on such premature closure of account
- Account can be transferred from one post office to another
- Any number of accounts can be opened in any post office
- Subsequent deposit can be made up to 15th day of next month if account is opened up to 15th of a calendar month and up to last working day of next month if account is opened between 16th day and last working day of a calendar month
- If subsequent deposit is not made up to the prescribed day, a default fee is charged for each default, default fee @ 1 Rs for every 100 rupee shall be charged. After 4 regular defaults, the account becomes discontinued and can be revived in two months but if the same is not revived within this period, no further deposit can be made
- *If in any RD account, there is monthly default amount, the depositor has to first pay the defaulted monthly deposit with default fee and then pay the current month deposit. This will be applicable for both CBS and non-CBS
- There is rebate on advance deposit of at least 6 installments, Rs. 10 for 6 month and Rs. 40 for 12 months Rebate will be paid for denomination of Rs. 100
- Minor after attaining majority has to apply for conversion of the account in his name
- One loan up to 50% of the balance allowed after one year. It may be repaid in one lumpsum along with interest at the prescribed rate at any time during the currency of the account
- Protected Savings Scheme is applicable for the account of denomination Rs 100/-
- Online Deposit facility is available through Intra Operable net banking /Mobile Banking
- Online Deposit facility is available through IPPB Saving Account
- Date of maturity will be 5 years after date of opening. Account can be extended for further 5 year by giving application at account office
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