Markets have corrected, it's the best time to invest in mutual funds and save 46,800 in taxes a year
Build up your savings through regular monthly deposits of a fixed sum over a period of time with SBI’s Recurring Deposit. This is a great option for those who have fewer earnings as the monthly deposit amount is very less in State Bank of India.
|Investment period||RD rates for regular deposit||RD rates for Senior Citizens|
|1 year to 1 year 364 days||6.80%||7.30%|
|2 years to 2 years 364 days||6.80%||7.30%|
|3 years to 4 years 364 days||6.80%||7.30%|
|5 years to 10 years||6.85%||7.35%|
Saving a specific amount of money every month can lead to a substantial rainy-day fund in the long term. Recurring Deposits are a good way of doing this. However, they are not the best saving option when your goal is wealth creation. Let’s say you plan on saving for your retirement. A Recurring Deposit with 6.95% interest rate may not give you the returns you need to create a retirement fund. However, depositing the same amount in a Mutual Fund as SIP (Systematic Investment Plan) can help you create the kind of wealth you are aiming for.
State Bank of India allows its users to prematurely withdraw money from their RD account. However, partial withdrawal of the amount is not allowed.
The bank will also charge a nominal amount as penalty for premature withdrawal. This will depend on the scheme chosen.
All Recurring Deposits, including SBI Recurring Deposit, are taxable under the Income Tax Act 1961. The money that is invested in the RD will be included in your yearly income and a TDS (Tax Deducted at Source) of 10% is applicable on the interest earned (if it is more than RS. 10,000 per year). To save TDS on your RD gains, you can fill either Form 15G or Form 15H.
Conditions for submitting Form 15G:
Conditions for submitting Form 15H:
– PAN card
– Driving license
– Government ID card
– Photo ration card
– Senior citizen ID card
– Telephone bill
– Electricity bill
– Bank Statement with Cheque
– Certificate/ ID card issued by Post office
State Bank of India offers two different types of Recurring Deposits. These are:
Regular Recurring Deposits: This type of RD account is generally opened by those who want to save some money. The tenure of this account can go up to 10 years, and the interest rate is fixed for the tenure. However, SBI Recurring Deposit interest rates can keep changing from time to time. So, make sure you start your RD account when the interest rates are high.
Holiday Savings Account: SBI, in partnership with the travel company Thomas Cook, allows its users to start a holiday savings account solely for the purpose of traveling. When a user chooses a holiday package from Thomas Cook, the cost of the package is divided into 12 monthly installments. You can even earn interest on your installment payments.
SBI Flexi Deposit Scheme: This is a unique type of RD in which users are allowed to change the amount of monthly installment amount according to their convenience. The minimum deposit should be Rs. 5,000 in one financial year and it can go up to a maximum of Rs. 50,000 per year.
The RD interest rate in India varies from bank to bank and depends on the RD scheme chosen, the tenure, and the monthly deposit amount. Generally, banks offer higher rates when the RD tenure is above 15 months. Also, some banks may offer high RD interest rates for senior citizens and women.
|State Bank of India||HDFC Bank||ICICI Bank||Axis Bank|
|Indian Bank||RBL Bank||IDBI Bank||IDFC Bank|
|Corporation Bank||Andhra Bank||PNB Bank||Canara Bank|
|Union Bank of India||Central Bank||Bank of India||Bank of Baroda|
|Syndicate Bank||Allahabad Bank||Kotak Mahindra Bank|