The Buyt Desk
Post office RD is a secured investment option for low-risk appetite investors. Know everything about post office RD in this article.
The post office recurring deposit allows investors to save some amount every month for five years. It means 60 equal instalments. This scheme is an offering of the Post Office and has government backing. It is an excellent saving option for those individuals who don’t have a lump sum corpus and can save by depositing a small amount regularly.
The Prevailing Interest Rate Of PORD
The current interest rate of PORD is 5.8%. It is important to note here that the interest rate of PORD is subject to change according to the government announcements. The interest in PORD is compounded every three months, i.e. quarterly basis. However, it is more than the interest rate you get in a savings account.
The Top Features Of PORD
An individual can start the account with any amount. It can be as small as Rs 10. Nevertheless, the amount should always be in a multiple of 5.
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There is no maximum limit on the amount to be deposited.
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An individual can add one or more than one nominees to the account.
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On the deposit of six or more instalments in one go, the account holder gets a rebate in the next instalment payments.
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Single and joint operation is allowed.
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If the account holder misses the payment, the penalty will be imposed. It is Re.0.05/Rs 5.
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Premature closure of account is allowed after three years. In this case, the settlement amount will be the principal amount with no interest.
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The account holder can transfer the account from one post office to another.
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The account holder can withdraw 50% of the account balance after the completion of one year.
What Are Eligibility Criteria For Opening Of Post Office Recurring Deposit Account?
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Any individual above the age of 18 years can open an account. The account holder can operate it individually or jointly.
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A minor over ten years old can open and operate a PORD account jointly with a guardian.
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Parents of minors can open the account on their behalf.
Why Is It Beneficial To Invest In A Post Office RD Scheme?
The Post Office RD scheme allows individuals to save money in small amounts regularly. Furthermore, this investment is eligible for tax exemption under section 80C of the Income Tax Act, 1961. The scheme does not deduct TDS on the principal amount, but the interest income is taxable. It is deducted according to the individual’s income tax slab rate.
Furthermore, the post office gives the facility to individuals to open an account both online and offline. However, to open an account online, one has to visit the nearest post office and submit documents like PAN Card, passport or any government ID card and Aadhar card.
For the payment of instalments, there is an app present, India Post Payment Bank. It is a common app for the payment to different government run-saving schemes, like sukanya samridhi scheme, PORD and PPF, etc.
