Is RD Taxable In India?

With Recurring Deposits (RDs), investors can invest on a monthly basis for a period ranging from 6 months to 10 years, and get returns. You can better plan your investment by reading this article.

What is a Recurring Deposit?

RDs or recurring deposits are a type of term deposit where you can invest a fixed amount every month and get returns at the end of the tenure. Here are some salient features of an RD - 

How is RD Taxable?

The interest earned on the principal from RDs is taxable. It doesn’t come under Section 80C benefits and will be taxable under "Income from Other Sources".

10% TDS will be deducted if interest income on RDs is more than Rs.40,000 for the general public and Rs.50,000 for senior citizens in a financial year.  Please note that PAN submission is mandatory to avoid a higher 20% TDS deduction.

How to Avoid TDS on RD?

Even though RD is taxable, there are ways you can avoid the taxes. Read how you can do so - 

Conclusion

Recurring deposits are subject to TDS or Tax Deducted at Source, just like fixed deposits or any other type of savings product. 

Investors need to report their RD interest income in their Income Tax Return (ITR) to avoid penalties. Some crucial factors related to recurring deposits include submitting a valid PAN, applying for Form 15G/H, claiming refunds, and calculating taxable income.

Is RD Taxable in India - Related FAQs

The tax exemption limit for RDs is Rs.40,000 for the general public and Rs.50,000 for senior citizens.

Non-senior citizens can file Form 15G while senior citizens can submit Form 15H to minimize TDS on recurring deposits.

If a PAN Card is submitted, 10% of interest income will be subject to a TDS deduction. If PAN is not submitted TDS rate will be 20% under the Finance Act, 2015 effective from June 1, 2015.

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