Many a times people get confused that in what way they can invest there hard earned money in order to earn more from it . FD and RD are one of the financial instrument by which an investor can have fixed returns as well as can have surety of that there money is safe.
FEATURES
- FD and RD are fixed income products available from banks.
- On the investment banks pay you specific interest.
- In FD and RD, once you have invested the interest rate remain the same throughout the year.
- At the maturity of both the instruments investors gets the principal amount that he/she had invested.
- along with principal amount the remaning interest is paid.
TAXABILITY
- FD and RD have same taxability.
- the interest received from both of the products are added in the personal income of the investor and it is taxable from the personal income of the investor. (depending on the income falling under the income tax slab)
- both are taxable at the same rate only when you under 30% tax slab.
- In a FD, banks deduct TDS (Tax Deducted at Source) if the interest income in a year exceeds Rs 10,000.
- there is no TDS deduction in RD.
EARNING
- on FD you invest lumpsum amount and the entire money earns for one year.
- on RD you earn first installment for 12 months period, second for 11 month period, third for 10 months periods and so on.( due to this variation FD is able to grab higher maturity)
WHEN TO INVEST IN FD & RD
it is not feasable for one product to meet all your needs. when you you don't have lumpsum money to invest then you can go for RD in order to meet your regular needs and if you have lumpsum money to invest you can go for FD. both the products appeal to all class of investors.
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