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Sunday, November 3, 2019

How to open RD account and how to create wealth with bank RD

Recurring deposit (RD) banks are a worthwhile avenue if you are looking at ways to save and invest some portion of hard-earned money every month, but want fixed and protected returns.

A bank RD is a type of fixed deposit (known as the fixed deposit) that allows you to invest regularly and systematically every month, allowing you to fulfill particular financial objectives. Besides, a bank RD will help you deal with liquidity needs provided you choose the tenure and investment amount carefully.

If you do the following, you can also create wealth from Bank RD:

  • Open an RD account at high-interest rates
  • Invest regularly and do not neglect to deposit (disciplined) your installment amount.
  • Carefully choose the amount and tenure of your bank, recurring deposit compound interest calculator india.
  • Do not stop investing in the RD account and don't close it before prematurely.
  • Keep renewing your RD or make a fixed deposit of maturity income at the end of the period.

Whether interest earned on bank RD is taxed and how?

Interest earned on fixed deposits from a bank is taxable under the Income Tax Act, 1961. Interest earned on RD taxed based on tax as per income tax slab. However, the bank first deducts tax on (source) TDS. TDS deducted on the interest earned on your bank RD based on the estimated total interest for the financial year with your bank RD.

Interest earned on Recurring deposit taxed as per the income tax slab on one accrual basis. However, the bank deducts tax at first source (TDS). In respect of interest earned on your bank RD, TDS deducted based on estimated total interest on the total of your bank RD for the financial year.

How can I open a Bank RD account?

Internet Banking

The following methods can be used to open a Bank RD account:
  • Log in and choose the deposit option on Internet banking (Create Recurring Fixed Deposit).
  • Complete required account details and nominee (On confirmation).
  • The selected amount will be debited from your savings account and your RD account will create instantly.
  • After the RD account is open up, the 'Recurring Fixed Deposit Advice' will be sent to your registered email ID.
  • Apart from this, you will also be able to see 'Recurring Fixed Deposit Advice' on Internet Banking a day after booking the deposit.
Mobile Banking

  • Log in to Mobile Banking and choose to deposit option (select open RD).
  • Complete the account statement and the nominee (On confirmation).
  • The selected the amount debit from your savings account and created your RD account immediately.
  • After the RD account created, the 'Recurring Fixed Deposit Advice' will be sent to your registered email ID.
  • You can see 'Recurring Fixed Deposit Advice' on mobile banking the day after registration of the deposit.

Note: Not suitable for long-term wealth creation or have a high-risk appetite likes young investors in their 20s or 30s.

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