Post Office Recurring Deposit Scheme

Post Office Recurring Deposit Scheme is offered by the India Post (Department of Posts) for allowing people to save a fixed sum every month and earn an interest rate up to 7.3% per annum at the end of the maturity period. The interest rate is calculated based on the applicable rate compounded every quarter. In this article, we look at the Post Office Recurring Deposit Scheme in detail. To know more about the Post Office Monthly Income Scheme

Eligibility Criteria

The Post Office Recurring Deposit (PO RD) scheme can be opened for 5 years. Any individual can open the Post Office Recurring Deposit (RD) Account Scheme who satisfies the below criteria.

Any Indian Resident who is over 18 years of age.
Two persons jointly (Minors of over 10 years of age and above can open the account jointly with guardian)
Parent or guardian can open this account on behalf of a minor.

Note:

The Recurring Deposit (RD) Account cannot be opened by the Non-Resident Indians (NRIs), and HUFs are also not eligible to open this account.
If a person opened the account and after that he/she becomes NRI, then they can continue their account till its maturity on a non-repatriation basis.
A person other than a guardian cannot open the RD account in the name of a minor by contravening the provision.

Features of the Post Office Recurring Deposit Scheme

The below listed are the main features of the Recurring Deposit (RD) Account by the India Post.

The account’s maturity period shall be of 5 years and can also be extended for the next years on year to year basis.
This RD account can be opened with a minimum amount of Rs. 10 per month. There is no maximum limit to the amount deposited. The amount deposited needs to be in the multiples of Rs. 5.
A depositor can have any number of accounts that can be opened in his name or jointly with another in any post office.
Transferring of these accounts can be easy from one post office to another.
Nomination facility is available that you can nominate during the account opening or even after the opening of the RD account at ease.
Opening of the RD account by cash as well as the cheque. In case of cheque, the deposited amount date would be the date of the presentation of the cheque.
If a person deposits their instalments through cheque, the date of cheque credited into the government account would be treated as the date of deposit.
If found any default in any month, then the depositor must pay the default amount along with the default penalty and after which the current month deposit can be made.
The default penalty will be charged at 5 paise for each Rs. 5 deposited. After the regular defaults for 4 times, the account becomes discontinued.
It can be recovered in 2 months, but if the same is not activated within this specified period, no further deposit can be made with this account.
The rebate is too available if the customer deposits at least 6 advance instalments.
Changing of a single account into a joint account and vice versa.
After completing majority, the minor has to apply for the change of the account on his name.
After a year of account opening, you can make a withdrawal up to 50 per cent of the balance amount available in their account is allowed.
If the account has been opened up to half a month of the calendar, then his following instalments can be made up to the half of the next month (i.e. 15th) and if the account is opened in the second half of the month, his following last date to pay the instalments would be the last working day of the month.

Procedure to open Post Office Recurring Deposit (RD) Account Scheme

Approach a Post Office Step 1: First the user must decide the Post Office where they want to open the account. Get Application Form Step 2: Get the application form from the relevant office and have to fill out the domicile application form in a prescribed format. Note: The user may also download the Post Office Recurring Deposit (RD) Account Opening Form online. Post Office Recurring Deposit (RD) Account Opening is reproduced below for the ready reference. [pdf-embedder url="https://www.indiafilings.com/learn/wp-content/uploads/2019/03/Post-Office-Recurring-Deposit-RD-Account-Opening-Form.pdf"] Fill in the Right Credentials Step 3: Fill the Post Office Recurring Deposit (RD) Account Opening application form with appropriate details without any mistakes. Provide the given following details in the application form.

Applicant’s Name
Residential Address
Applicant’s Date of Birth
Detail of Know Your Customer (KYC)
Nomination Details
Details of First deposit
Aadhaar card number

Step 4: Submit the RD account application form application form in the prescribed format to the concerned authority along with all the supporting certificates. Attach Required Documents Step 5: After applying, attach the PAN Card, Address Proof, and ID proof records along with the application form. And carry the originals for the in-person KYC verification purpose. Submit the Application Step 6: After completing the application form, submit the same and start operating the account.

Tax Benefits of Post Office Recurring Deposit (RD)

The interest income from investing in Post Office Recurring Deposit is taxable income. The interest income will be taxed under the head of “Income from Other Sources”. There is no TDS on such compiled corpus. It is the responsibility of a depositor to indicate the income and pay the tax as per his tax slab.