Effective from 1st June 2019, RBI extended the timings available for RTGS Timings. Hence, let us see the new NEFT and RTGS Timings.
RBI in it’s new circular dated 28th May 2019, declared that RTGS timings have extended up to 6 PM rather than the existing 4.30. This is I think a good move for all of us.
What is the difference between NEFT and RTGS?
Before jumping to understand the new changes, let us have a basic understanding of what is NEFT and what is RTGS.
What is the meaning of NEFT or National Electronic Funds Transfer?
It is a nationwide payment system facilitating one-to-one fund transfers. Using this system, you can transfer funds from any bank branch to any individual having an account with any other bank within India.
Let us take an example. Mr.X has a bank account with HDFC and he wants to transfer the money to Mr.Y, whose account is with ICICI. Therefore, by using NEFT facility Mr.X can transfer money to Mr. Y’s bank account.
There is no minimum or maximum limit for NEFT Transfer.
What is the meaning of RTGS-Real Time Gross Settlement?
In NEFT, money transfer requests are clubbed together called batches. Such batches are settled based on Deferred Net Settlement (DNS) on hourly base during NEFT timings. Whereas in RTGS it is real time. It means money transferred individually instead of batches instantly. Therefore, compare to NEFT, RTGS is faster.
Let us take an example. Mr.X has a bank account with HDFC and he wants to transfer the money to Mr.Y, whose account is with ICICI. Therefore, by using RTGS facility Mr.X can transfer money to Mr. Y’s bank account instantly. In this transaction, HDFC transfers the initiated transfer amount to ICICI bank instantly. However, ICICI bank has a maximum of 30 minutes time to deposit into Mr. Y’s account. Hence, depending on the beneficiary bank’s procedure within two hours Mr.Y get the amount in his account.
The minimum amount to be transferred under RTGS is Rs.2,00,000. However, there is no upper limit.
New NEFT and RTGS Timings – Effective from 2019
The recent change by RBI is only about RTGS but not with NEFT. Hence, the schedule of NEFT will be as usual. Let us see the new NEFT and RTGS Timings effective from 1st June 2019.
Note:-Effective from 26th August 2019, RBI increased operating timings of RTGS. Earlier it was at 8 AM. But effective from 26th August 2019, it will be from 7 AM in the morning.
As I pointed, there is no change in NEFT timings. However, in case of RTGS, the earlier customer transaction last timing was 4.30. This is now extended up to 6 PM. Hence, the additional 1.30 hours for the customers to transfer the fund using the RTGS facility.
NEFT and RTGS Charges 2019
As per the Press Release of RBI Dated 6th June 2019, RBI completely removed the NEFT and RTGS charges which it used to levy on Banks for such transactions and asked the banks to transfer the benefits to customers.
“The Reserve Bank levies minimum charges on banks for transactions routed through its Real Time Gross Settlement System (RTGS) meant for large-value instantaneous fund transfers and the National Electronic Funds Transfer (NEFT) System for other fund transfers. Banks, in turn, levy charges on their customers. In order to provide an impetus to digital funds movement, it has been decided to do away with the charges levied by the Reserve Bank for transactions processed in the RTGS and NEFT systems. Banks will be required, in turn, to pass these benefits to their customers. Instructions to banks in this regard will be issued within a week.”
Hence, effective from 2019, there will be no charges on NEFT and RTGS transactions for bank customers.
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Kuldeep Verma
Dear Sir,
I claimed for my pf pf amount on 11-02-2021 through online mode but untill the amount is not credited into my account. So please can you suggest me how much time it will take for settlement.
Basavaraj Tonagatti
Dear Kuldeep,
Hard to say.
lAKIREDDY VENKATAREDDY
From what date the neft and rtgs charges will be waived by the banks
Basavaraj Tonagatti
Dear Iakireddy,
Effective fro 1st July 2019, RBI removed the charges applicable on NEFT and RTGS fund transfer.
Raju
Hello Sir, I’m in 20% tax slab. I’ve some FDs running and that taxed at 20% flat. I’m considering tax saving investments to reduce my tax burden. Please advice if VPF (voluntary provident fund) 10k/month is a good idea.
As I heard VPF is EEE, interest earned is 100% tax free and interested earned is compounded every year. Also withdrawal amount (principal+interest total) is 100% tax free when I retire.
I already utilize 80C full with PPF. If you have better alternative investment suggestions, it would be very helpful !!
Basavaraj Tonagatti
Dear Raju,
VPF comes under Sec.80C.
Raju
Thanks Sir, I’m in 20% tax slab. I’ve some FDs running and that taxed at 20% flat.
I’m considering tax saving investments to reduce my tax burden.
Please advice if VPF (voluntary provident fund) 10k/month is a good idea.
Please confirm if VPF is EEE, means interest earned is 100% tax free and interested earned is compounded every year. Also withdrawal amount (principal+interest total) is 100% tax free when I retire.
Basavaraj Tonagatti
Dear Raju,
Yes, as of now EPF and VPF are tax free and considered as EEE product. However, do remember that both are part of Sec.80C. Hence, if you already exhausted the limit and you investing more in VPF is for tax saving, then no saving for you.
Raju
Thanks Sir for your clarification! My concern is not about principal (which I invest) tax free in 80C.
My concern is interest. I’m in 20% tax slab. So if I invest 10k x 12 month = 1.2 Lac in RD, my interest at 7% P.A will be 8400 Rs, that will be taxed at 20%.
But instead if I invest 10k in VPF from salary I’ll get 8.65% P.A interest on 1.2 Lac and interest will be 10380 Rs and that will be 100% exempted from tax! Which will be compounded every year.
Let me know if my understanding is correct.
Basavaraj Tonagatti
Dear Raju,
The first mistake you are doing is comparing two entirely different products. VPF for long term and retirement BUT RD for short term. First understand your NEED, then think about taxation and product. You are not clear of what is your actual need.
Raju
Sorry Sir if I could not present myself. Right now I’ve few FD running auto renewing. I see every year interest of which is added to my total income from salary and is taxed at 20% flat.
Now If I open a new FD, which’s interest will again add to my total income and taxed @ 20%. And FD interest is at lowest now.
So I was thinking if I invest 10-20k in VPF from salary (which I otherwise put in RD/FD) I’ll get 8.65% P.A interest on 1.2-2.4 Lac principal and interest will be 100% exempted from tax! Which will be compounded every year.
Let me know if my understanding is correct from tax savings perspective.
Basavaraj Tonagatti
Dear Raju,
First decide when you need the money of whatever you are planning to invest either in FD or in VPF, then choose the product. Never just concentrate on TAX for all your financial decisions.
Raju
I don’t need the money Sir. It’s my ‘fund’ which I put in FD, auto renewal. Already interest rate is dropped 20% from previous, moreover interest taxed at 20%. I’m getting 20% less income from FDs compared to 2-3 years back.
So I was thinking if I invest 10-20k in VPF from salary (which I otherwise put in RD/FD) I’ll get 8.65% P.A interest on 1.2-2.4 Lac principal and interest will be 100% exempted from tax! Which will be compounded every year.
Let me know if my understanding is correct from tax savings perspective.
Basavaraj Tonagatti
Dear Raju,
You don’t need that money means? Can you elaborate more specifically like WHEN YOU NEED?
Raju
Dear Sir, I don’t need the capital of FD amount now, as my salary is enough, so FD is auto-renewal. However interest rate is dropped 20% from previous, moreover interest taxed at 20%. I’m getting 20% less income from FDs compared to 2-3 years back.
So I was thinking if I invest 10-20k in VPF from salary (rather than put in RD/FD) I’ll get 8.65% P.A interest on 1.2-2.4 Lac principal and interest will be 100% exempted from tax! Which will be compounded every year.
Let me know if my understanding is correct from tax savings perspective.
Basavaraj Tonagatti
Dear Raju,
Do you need this money at your retirement?
Raju
Yes Sir.
Raju
Dear Sir, I don’t need the capital of FD amount now, as my salary is enough, so FD is auto-renewal. However interest rate is dropped 20% from previous, moreover interest taxed at 20%. I’m getting 20% less income from FDs compared to 2-3 years back.
So I was thinking if I invest 10-20k in VPF from salary (rather than put in RD/FD) I’ll get 8.65% P.A interest on 1.2-2.4 Lac principal and interest will be 100% exempted from tax! Which will be compounded every year.
Let me know if my understanding is correct from tax savings perspective.
Basavaraj Tonagatti
Dear Raju,
If this money is towards your retirement, then you can use VPF. However, if this investable amount is required for other goals, then don’t invest in VPF. Rather use PPF.
Prasanth
Thanks for sharing valuable information. Prasanth
Basavaraj Tonagatti
Dear Prasanth,
Pleasure 🙂
R K BHUWALKA
Dear Basu
Are you aware about it; I just read.
RBI decides to waive RTGS/NEFT Charges & will review ATM charges
Review of Charges for RBI-operated Payment Systems
The Reserve Bank levies minimum charges on banks for transactions routed through its Real Time Gross Settlement System (RTGS) meant for large-value instantaneous fund transfers and the National Electronic Funds Transfer (NEFT) System for other fund transfers. Banks, in turn, levy charges on their customers. In order to provide an impetus to digital funds movement, it has been decided to do away with the charges levied by the Reserve Bank for transactions processed in the RTGS and NEFT systems. Banks will be required, in turn, to pass these benefits to their customers. Instructions to banks in this regard will be issued within a week.
Constitution of a Committee to Review the ATM Interchange Fee Structure
Usage of Automated Teller Machines (ATMs) by the public has been growing significantly. There have, however, been persistent demands to change the ATM charges and fees. In order to address these, it has been decided to set up a Committee involving all stakeholders, under the chairmanship of the Chief Executive Officer, Indian Banks’ Association (IBA), to examine the entire gamut of ATM charges and fees. The Committee is expected to submit its recommendations within two months of its first meeting. The Composition and Terms of Reference of the Committee will be issued within a week.
Basavaraj Tonagatti
Dear Bhuwalka,
I have already updated the same in the above post. Please refer it.
Anil sharma
Neft limit is less then 2 laks
Rtgs limit is starting more than 2 laks
Basavaraj Tonagatti
Dear Anil,
Thanks for updating this limit. However, there is no minimum or maximum limit for NEFT. But for RTGS the minimum limit is Rs.2 lakh.
R K BHUWALKA
Dear Basu
Very informative article which will benefit many business-houses who are transferring money through RTGS/NEFT.
A small error has been crept in. Under ‘New NEFT and RTGS Timings – Effective from 2019’, in the said BOX, after 9.30 AM it is mentioned as ‘aO’ AM’. Please do the necessary correction.
RK Bhuwalka
Basavaraj Tonagatti
Dear Bhuwalka,
Oh yes…It should be 10 AM. Thanks.
sat
Hi Basu thanks for nice article. I have one question SBI as of now is charging around Rs2 for NEFT transaction also. Does NEFT charges is not governed by RBI or it depends on Bank. ICIC doesnt charge
Basavaraj Tonagatti
Dear Sat,
NEFT charges are left with the banks. Hence, there is a variation in charges.
Bapaiah Paturi
Sir, I want to join in Fee only advisors service. I am a small investor . Please furnish your fee details so as to enable me to join your service
Basavaraj Tonagatti
Dear Bapaiah,
Please send an email to tonhokrani@gmail.com by sharing your contact number to discuss further.
Aradhana
Hi Sir,
I have made a NEFT payment to my credit card A/c and its still not reflecting at their.
They told me tha it takes 48 hours.
Basavaraj Tonagatti
Dear Aradhana,
Please refer above post properly. If you did the transactions after the NEFT closure timing, then the amount will be credited to the beneficiary account on the immediate working day but not 48 HOURS..