State Bank of India (SBI) is running a special Recurring Deposit (RD) scheme, named ‘Har Ghar Lakhpati’. Under this scheme, you can deposit a small amount monthly and accumulate one lakh or more rupees. In this, general citizens are being given a maximum of 6.75% annual interest and senior citizens are being given a maximum of 7.25% annual interest. This scheme is a fantastic opportunity to make your dreams come true.
Know how these small savings can become a big support
Recurring Deposit or RD can help you make big savings. You can use it like a piggy bank. Meaning, that when you get a salary, you keep putting a fixed amount in it every month and when it matures, you have a big amount in your hand. The maturity period of ‘Har Ghar Lakhpati’ usually ranges from 3 years to 10 years. That is, you can invest from 3 years to 10 years. This is a disciplined way to secure your financial future.
Know ‘eligibility’ and how to open an account
Any Indian citizen can invest in this scheme. Individuals can also open the single or joint account in this account. At the same time, parents can open an account with their child (above 10 years of age and able to sign properly). This SBI scheme provides an excellent saving opportunity for everyone. You can easily open an RD account online or by visiting the nearest SBI branch.
Interest earned from RD is taxed
If the interest income earned from recurring deposit (RD) is up to ₹ 40,000 (₹ 50,000 in the case of senior citizens), then you will not have to pay any tax on it. If the income is more than this, then 10% TDS (Tax Deducted at Source) is deducted. However, with some conditions, you can also avoid TDS. This is important information to understand your tax liability.
Get rid of TDS
If your annual interest income from RD is more than ₹ 40,000 (₹ 50,000 in the case of senior citizens), but your total annual income (including interest income) is not to the extent where it is taxable, then the bank does not deduct TDS. For this, senior citizens have to submit Form 15H to the bank and others have to submit Form 15G. Form 15G or Form 15H is a self-declaration form. In this, you state that your income is totally outside the tax limit taxation. This can be a wise step to save your money.