By News Desk 
The State Bank of India (SBI) has announced a 0.20% reduction in the interest rates offered under its special recurring deposit scheme, ‘Har Ghar Lakhpati’. As per the revised rates, regular depositors will now earn a maximum interest of 6.55% per annum, while senior citizens will receive up to 7.05% annually.
What is the ‘Har Ghar Lakhpati’ Scheme?
‘Har Ghar Lakhpati’ is a targeted recurring deposit (RD) scheme that encourages small monthly savings to help individuals accumulate a corpus of ₹1 lakh or more over time. For instance, by depositing just ₹610 every month for 10 years, a depositor can accumulate ₹1 lakh at maturity through this scheme.
Understanding Recurring Deposits (RDs)
A Recurring Deposit (RD) functions much like a disciplined savings tool — similar to a digital piggy bank. Depositors contribute a fixed amount every month, usually post salary credit, and receive a lump sum along with interest upon maturity.
The tenure for the ‘Har Ghar Lakhpati’ RD ranges between 3 and 10 years, offering flexibility in investment duration based on personal financial goals.
Who Can Open an RD Under This Scheme?
This scheme is open to all Indian residents, and SBI allows the following types of account holders:
- Individual accounts
- Joint accounts
- Accounts for children above 10 years (if they can sign independently)
- Joint accounts with parents or legal guardians for minors under 10 years
Is RD Interest Taxable?
Yes, interest earned on RDs is taxable. However, no tax is deducted at source (TDS) if the total interest earned in a financial year does not exceed:
- ₹40,000 for general depositors
- ₹50,000 for senior citizens
If the interest income crosses these limits, TDS at 10% is applicable.
How to Avoid TDS If Your Total Income Is Non-Taxable?
If your total annual income — including RD interest — falls below the taxable threshold, you can submit Form 15G (for individuals) or Form 15H (for senior citizens) to your bank. These are self-declaration forms that notify the bank not to deduct TDS, affirming that your total income is below the tax limit.
Final Thoughts
The ‘Har Ghar Lakhpati’ scheme continues to be a promising option for low-risk savers, despite the marginal reduction in interest rates. With its simple monthly contribution model and tax-exemption options through proper documentation, it remains an accessible financial tool for families aiming to build a steady savings corpus.