Many types of rebates or discounts are also available on Post Office Recurring Deposit Post office recurring deposit. This rebate can be taken as a discount which is given by the post office to the holder of the scheme.
Like Fixed Deposit, Recurring Deposit RD is also a better means of investment. By depositing some money every month, you can add a good amount in the end. When RD is a means of earning, then it will also come under the purview of income tax. Therefore, if you earn from RD, then the rules related to income tax should also be known. If you know and follow the rules, then the chances of getting trapped will be less. Otherwise, what do you know if you become a victim of income tax notice?
RD account can also be opened in the post office with the bank. The only way to start an account. There may be some difference in just the interest received. Also, open an RD in the post office or in the bank, the rule of income tax remains the same. If you have started the RD scheme in the post office, then you can take advantage of tax exemption under section 80C. Income tax return can take advantage of tax exemption by showing investment of Rs 1.5 in ITR.
Income tax rules
There is also a rule to show Rs 1.5 lakh and get a discount. This discount is available only on the amount deposited. If you have earned interest in RD scheme, then it will come under the tax net. Income tax will have to be paid according to the tax category you fall in. If in a year more than Rs 10,000 is earned from RD in the form of interest, 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% on the interest of RD. Those who do not have a PAN card, their TDS will be deducted at the rate of 20%.
Rebate on Post Office RD
Many types of rebates or discounts are also available on Post Office Recurring Deposit Post office recurring deposit. This rebate can be taken as a 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 to only those customers who have paid their installment 6 months in advance. That is, if the next installment is paid 6 months in advance, then the benefit of discount is given by the post office.
Understand with this example
Understand this with an example. Suppose an RD holder named Harish decided to pay 1000 rupees in advance for his 10 month installment. Accordingly, Harish will get a rebate of Re 1 for every Rs 10. This rebate will be given on the amount which is being paid in advance. Since Harish is giving Rs 1000 in advance, he will get a discount of Rs 100 on Re 1 per 10.
Keep one thing in mind that if there is a delay in paying the installment, then the penalty will have to be paid. In such a situation, Harish may have paid the installment of 10 months in advance, but after that, if you delay in depositing the money, then the discount will be equal. If 4 installments are not paid on time, the RD account will be closed. For every 5 rupees, the RD account will have to be restarted only after paying a penalty of 5 paise.
RD’s rule
You can start investing even Rs 10 in Post Office Recurring Deposit. At present, interest is being received in this scheme at the rate of 5.80 per annum. In this, compound interest is available on the amount of interest. The term of post office RD scheme is 5 years. If an investor deposits 6 months installment in advance, then he is given a rebate. There is no maximum limit for depositing money in this scheme. In the post office, this account can be opened by two people together.
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