Recurring deposit schemes are a wonderful way to build your savings over a period of time through regular monthly deposits. Not only do you save money but also earn interest on your deposits. Continue reading to see what Allahabad bank’s recurring deposit options have to offer.
Allahabad Bank RD – Interest Rates for different Investment Periods
|Investment period||RD rates for regular deposit||RD rates for Senior Citizens|
|180 days to 269 days||6.50%||–|
|270 days to 364 days||6.50%||–|
|1 year to 1 year 11 months 29 days||7.00%||–|
|2 years to 2 years 11 months 29 days||6.75%||–|
|3 years to 4 years 11 months 29 days||6.50%||–|
|5 years to 10 years||6.50%||–|
Allahabad Bank Recurring Deposit – Interest Rates
- The recurring deposit interest rates offered to may vary from 7.00% to 7.25% pa, compounded quarterly.
- The applicable interest rate is subject to a tenure of investment.
- There is no lower/upper cap on the amount that can be deposited for normal RD account.
- TDS deductions are subject to existing income tax rules at the time of RD account opening
- Loan facility is available against RD account at attractive terms and rates
- Penalty on non-payment of the periodic deposit is Rs. 2 for every Rs.100/- per month for deposits of five years and less
Recurring Deposit: Is it the best way to save?
Saving a specific amount of money every month can lead to a substantial amount as an emergency fund in the long term.Recurring deposit options can be availed to do so. However, they are not the best saving option if wealth creation is the objective. Let’s see you plan on saving for your retirement. A Recurring Deposit with 6.5% interest rate may not give you the returns needed to create a substantial retirement fund. However, depositing the same amount in a Mutual Fund as SIP (Systematic Investment Plan) can help you achieve your financial goals.
The benefits of investing in SIPs
- A small amount of money that can be as low as Rs 500 can be deposited every month or every quarter.
- On the basis of your budget and investment goal, your money will be invested in debt or equity funds. In the past decade, Equity Linked mutual funds have performed well in the market with a return of 12-22%. This will give significantly higher returns than recurring deposits.
- There is no penalty on money withdrawal from SIP account. This means that SIPs have higher liquidity when compared to recurring deposits that levy a penalty on premature withdrawal.
- Returns from SIPs which invest in Equity Linked Mutual Funds (ELSS) are tax-exempt whereas the gains from an RD is taxable.
- The RD account can be opened by individuals, minors, students aged 10 years and above under parental guardianship, sole proprietors, partnership firms and limited companies
- Illiterate and Blind people can also apply for this account.
- Non-resident Indians can also open an RD account through NRO and NRE accounts
Premature withdrawal Rules
Allahabad bank allows account holders to prematurely withdraw money but a nominal amount of penalty might be levied on based on the scheme chosen. If the amount deposited is less than Rs 1 crore than 1% penal interest would be charged and if the amount deposited is greater than Rs 1 crore then 4% penal interest would be charged. However, partial withdrawal of amount is not allowed.
Tax benefits on Allahabad Bank RD
All recurring deposits, including Allahabad bank recurring deposit, are taxable under the Income Tax Act 1961. The money that is invested in RD will be included in your yearly income and a TDS ( Tax Deducted at Source) of 10% is applicable on the interest earned ( If it is more than (if it is more than RS. 10,000 per year).To save TDS on your RD gains, you can fill either Form 15G or Form 15H.
Conditions for submitting Form 15G:
- You are an individual or HUF
- You must be a Resident Indian
- You should be less than 60 years old
- Tax calculated on your Total Income is nil
- The total interest income for the year is less than the minimum exemption limit for that year, which is Rs 2,50,000 for the financial year 2016-17
To open a recurring bank account with Allahabad Bank, you need to submit any one of the following.
1. Proof of identity
- PAN card
- Voter ID card
- Driving License
- Government ID card
- Photo ration card
- Senior citizen ID card
2. Address Proof
- Telephone bill
- Electricity bill
- Bank statement with cheque
- Certificate /ID card issued by post office