Misconceptions about Rd Interest
Misconceptions about Rd Interest

Common public have many misconceptions when it comes to different types of financial products offered in the market. Recurring Deposit is one such financial products about which general public has many misconception. Let us look at some common misconceptions regarding investment advisors in India that are prevalent among the investors and get some clarity over the same.

Misconception 1 – Interest earned on Recurring Deposits is not taxable

Fact – TDS is applicable on Recurring Deposits

Misconception 2 – Banks do not deduct TDS when Recurring Deposits mature. This means the interest income earned out of Recurring Deposits need not be declared when we file Tax returns

Fact – Irrespective of whether Banks deduct TDS when Recurring Deposits mature or not, individuals have to declare the interest amount earned out of the same when they file their Tax returns

Misconception 3 – Recurring deposit norms pertaining to the minimum amount for which the same can be started are same in all Banks

Fact – The minimum amount for which a Recurring Deposited can be started varies between one Bank and another. It is not the same across all Banks

Misconception 4 – Fixed Deposits offer the advantage of availing loan on them. With Recurring deposits we do not have the same

Fact – Loan can be availed on existing Recurring Deposits also and the percentage must be ascertained with the Bank you are paring the RD

Misconception 5 – Premature closure is impossible in the case of Recurring Deposits as is possible in many other financial products

Fact – Premature close is possible subject to conditions stipulated by the financial Institutions. Ever Financial Institution lays its own set of rules pertaining to premature closure of Recurring Deposits, which are strictly adhered to by the investment advisors in India. It is important to check with the concerned Institution before actually closing the existing Recurring Deposit in a premature manner.

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