State Bank of India i.e. SBI is running a Recurring Deposit (RD) scheme named ‘Har Ghar Lakhpati’. Under this scheme, you will be able to deposit one lakh rupees or more in your account by depositing small amounts every month. In this, general citizens are being given a maximum of 6.75% and senior citizens are being given a maximum of 7.25% annual interest.
First understand what is RD?
Recurring Deposit or RD can help you in big savings. You can use it like a piggy bank. Meaning, you keep putting a fixed amount in it every month when you get your salary and when it matures, you will have a big amount in your hand. The maturity period of Har Ghar Lakhpati usually lasts from 3 years to 10 years. That is, you can invest for 3 years to 10 years.
Who can invest in it?
Any Indian citizen can invest in this scheme. Individuals can open a single or joint account in it. On the other hand, parents (guardians) can open an account with their child (above 10 years of age and capable of signing clearly).
SBI: Interest earned from RD is taxable
If the interest income from recurring deposit (RD) is up to Rs 40,000 (Rs 50,000 in case of senior citizens), then you do not have to pay any tax on it. If the income is more than this, 10% TDS is deducted.
If not in the tax net, then submit Form 15H-15G
If your annual interest income from RD is more than Rs 40,000 (Rs 50,000 in case of senior citizens), but your total annual income (including interest income) is not up to the limit where it is taxable, then the bank does not deduct TDS.
For this, senior citizens have to submit Form 15H in the bank and other people have to submit Form 15G. Form 15G or Form 15H is a self-declaration form. In this you state that your income is outside the tax limit.
