Recurring deposits exempted from TDS

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SummaryIs interest earned on recurring deposits taxable and what is the tax rate applicable if I invest R10,000 every month for two years?

Is interest earned on recurring deposits taxable and what is the tax rate applicable if I invest R10,000 every month for two years?

Surender Kumar

As per the Income Tax Act, recurring deposits are exempted from TDS (tax deducted at source). So, the bank would not deduct any tax at source on such accounts. But income tax is payable at the hands of investors on the interest income from recurring deposits. The interest income will depend upon the interest rate the bank pays and the tax amount will depend upon the slab of tax in which the depositor is placed. The tax rate will be the same as applicable to the bracket in which you fall, based on your overall income.

I have a PPF account in State Bank of India. Can I instruct the bank to take out R5,000 every month from my savings account and automatically deposit it my PPF account? What instructions do I give to the bank?

Jeevan Anand

As per Public Provident Fund Act, 1968, any individual can deposit a minimum of R500 and a maximum of R70,000 in a financial year.

The deposit can be made by way of cash, cheque, NEFT (national electronic fund transfer) and/or SIP (systematic investment plan). The depositor can instruct the bank/branch in writing that a specified sum of money be paid into her PPF account by debit to her account per month. The depositor should give standing instructions to her bank on the above lines giving details of both the accounts. The customer should ensure adequate balance in her account for the bank to carry out standing instructions.

Last month, I had deposited a cheque that was lost by the bank. What is the procedure to approach the banking ombudsman to get a redressal?

Ritesh Kumar

You should first approach the bank concerned with your complaint. Only if you do not get a satisfactory response within 30 days or your complaint is rejected before that period can you approach the banking ombudsman under whose jurisdiction the branch or office of the bank in question is located, either directly or through your authorised representative. For this purpose, you need to use the format given as Annexture A to the Banking Ombudsman Scheme, 2006.

Copies of relevant supportive documents, if any, should be attached and a complaint made through electronic means will also be accepted by the banking ombudsman.

The writer is managing director, State Bank

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