Features and Benefits of Monthly Income Scheme (MIS)
The interest you earn on a recurring deposit depends on the amount you contribute and the tenure of the deposit. The rates of interest offered by banks is similar to the interest rates offered on term deposits.
The tenures offered will differ between banks. Usually the minimum tenure is 6 months and the maximum tenure is 10 years.
Upon maturity, the bank will pay you the sum you have saved plus interest accumulated. This money will either be paid in cash or be credited to your bank account. The maturity value of your deposit will be indicated when you open the RD account.
Loan options :
Banks accept RDs as collateral to avail of loans. One can take a loan of 80% to 90% of the value of the deposit.
Tax Deducted at Source :
Recurring Deposits recently were brought under taxable income. With effect from June 2015, tax deducted at source (TDS) is applicable on recurring deposits. If the interest on these deposits exceeds Rs. 10,000 per annum, then 10% would be deducted at source. The RD holder will also have to declare interest earned and pay income tax on this amount.
Late Payments :
Banks levy a penalty if you miss the monthly deposit by the due date. There are some banks that waive this penalty.
Premature Withdrawal :
Most RDs can be closed ahead of the maturity date. A penalty charge plus a penalty on the interest rate may be levied.
Terms & Conditions :-
Minimum MIS would be of Rs. 10000 /- and further in multiple of Rs. 1000 /-
TDS Deducted as per provisions and income tax Act.
Special MIS is applicable only for Senior citizens, women, and Govt. employ and for pensioners.
Loan available against deposits up to 75% of deposited amount after one month from the date of deposit.
Payment before maturity not allowed for 90 days deposit scheme and Payment before maturity allowed to other MIS plans, in this case the Calculation of interest on pre-mature payment will be applicable as per savings a/c's rate of interest and already paid interest amount will be deducted from the principal amount.