Recurring Deposit – The banks offered a Recurring Deposit which is a different kind of Term Deposit in our country. It helps to those people who have regular income for deposit a fixed amount of rupees in each month in their recurring deposit and receive interest which is applicable for Fixed Deposits. Recurring Deposits is same as making Fixed Deposits in a definite amount for monthly installments. This type of deposit which matures on a definite date received every month with all the deposits. This scheme allows consumers to make their savings by the regular deposits in every month of a fixed amount in a definite period of time. There is a minimum period of Recurring Deposit is 6 months and maximum period is 10 years.
The consumers of the banks are sponsored to the Recurring deposits to withdraw a certain amount of money from his Saving or Current account and credit to the Recurring Deposit account.
After the Recurring Deposit is opened then the maturity of amount specified that the consumer will be paid regularly monthly installments on due dates. When any installment is late, the interest is billed in the account of customer will be decreased and not enough to reach the maturity value. So the change in the interest will be subtracted from the maturity value as a fine. The amount of fine will be fixed upfront. The interest is compounded which on three months basis in recurring deposits.
The customer can benefit loans against the collateral of Recurring deposit is about 80 to 90 percent of the deposit value.
The Fixed Deposits is similar to the rate of interest. Previously it is the greatest system to save the money for several years of deposits.
Taxation of Recurring Deposit – Tax Deducted at Source (TDS) is appropriate for recurring deposits. If received interest is on recurring deposits increased by Rs 10,000 annually, the bank deducted 10 percent TDS on that amount. If the customer will submit the Form 15G then avoid the TDS on the fixed deposits and recurring deposits.