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Bank of India Recurring Deposit (RD) account allows you to build up your savings systematically with monthly fixed deposits over some time. Understand the options available under Bank of India’s recurring deposit schemes to save money and earn interest on your payments. Continue reading to see what the Bank of India recurring deposit options have to offer!
Union Budget 2021 Outcome:
It has been proposed to exempt senior citizens from filing income tax returns if pension income and interest income are their only annual income source. Section 194P has been newly inserted to enforce that banks deduct tax on senior citizens of more than 75 years of age who have a pension and interest income from the bank.
The interest rates given below were updated on 1 January 2021.
|Deposit Tenure||Interest Rates for Regular Customers (% p.a.)*||Interest Rates for Senior Citizens (% p.a.)*|
|180 days to 269 days||6.25||6.75|
|270 days to 364 days||6.25||6.75|
|1 year up to 1 year 364 days||6.65||7.15|
|2 years up to 2 years 364 days||6.70||7.20|
|3 years up to 4 years 364 days||6.50||7.00|
|5 years up to 7 years 364 days||6.50||7.00|
|8 years up to 10 years||6.35||6.85|
*Interest rates are subject to change from time to time.
Income tax will be deducted at source (TDS) by the bank if the interest earned on the FD and RD accounts across all the bank branches exceeds Rs.40,000 per financial year. The limit for senior citizens is Rs.50,000. Note that TDS will be applicable at 10%.
TDS is now reduced from 10% to 7.5% due to the pandemic, effective from May 2020 until March 2021. You can submit Form 15G or Form 15H, as applicable, to request the bank not to deduct tax at source only if your annual income is within the basic exemption limit.
Visit our free RD calculator page to know how much returns you can expect by investing in RD over some time.
The bank allows you to make the instalment payment of a particular calendar month until the last working day of that calendar month. If you fail to make the payment by then, a penalty will be imposed on the instalment in arrears at the prevailing rate.
For instalments you have missed to pay within the stipulated time frame, the penalty structure is as follows:
The prevailing interest rates will be applied for the core deposit amount you set while opening the account. For any additional sum you deposit, the interest will be separately calculated for the period that stays in the account.
Say, you open the Star Flexi Recurring Deposit account on 1 January 2021 for three years with the core deposit being Rs.1,000 per month. If the prevailing interest rate is 6.4% p.a., you will earn the respective interest considering Rs.1,000 per month for 36 months. If you happen to have surplus funds in March 2021 and deposit Rs.8,000 on 1 April 2021 into the account, the excess deposit of Rs.7,000 will earn interest for 33 months, i.e. two years nine months.
Yes. Senior citizens can get an additional interest rate of 0.50% in the case of a minimum monthly deposit of Rs.100 in the case of the regular RD account and Rs.1,000 in a flexi RD account.
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