SBI Reinvestment Plan interest rates, tax benefits; All you need know about the savings scheme

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Updated: August 10, 2018 10:02:40 PM

The State Bank of India (SBI) is the largest public sector lender of India. The bank offers a variety of saving instruments such as fixed deposit accounts to mutual funds and gold monetisation schemes.

SBI Reinvestment Plan is a variant of SBI Fixed deposit. (Reuters)

The State Bank of India (SBI) is the largest public sector lender of India. The bank offers a variety of saving instruments such as fixed deposit accounts to mutual funds and gold monetisation schemes. Among these saving schemes, the bank also offers SBI Reinvestment Plan, which functions just like a fixed deposit.

What is the difference between SBI Fixed Deposit and SBI Reinvestment Plan?

Unlike SBI FD schemes, under SBI Reinvestment Plan, interest is given at the time of maturity. In SBI FD, the bank pays interest periodically.

Here is all you need to know about SBI Reinvestment Plan (a variant of SBI FD):

Instalments: Under the SBI Reinvestment scheme, the minimum investment required is Rs 1000. However, there is no maximum limit to invest in the plan.

Interest rates: The rates of deposits in SBI Reinvestment Plan are the same as offered on FD plans. SBI recently revised its interest rates on fixed deposits. Here are the latest SBI FD interest rates on depositd below Rs 1 crore:

(All figures in % per annum)

Term

Interest rate for general public w.e.f. 30.07.2018

Interest rate for senior citizens w.e.f. 30.07.2018

7 days to 45 days

5.75

6.25

46 days to 179 days

6.25

6.75

180 days to 210 days

6.35

6.85

211 days to less than 1 year

6.4

6.9

1 year to less than 2 year

6.7

7.2

2 years to less than 3 years

6.75

7.25

3 years to less than 5 years

6.8

7.3

5 years and up to 10 years

6.85

7.35

Tenure: According to sbi.co.in, the tenure ranges from six months to 10 years.

Premature Withdrawal: SBI offers premature withdrawal under the reinvestment scheme. However, premature withdrawal is taxable. For retail term deposit up to Rs 5 lakh, the penalty for premature withdrawal is 0.50%. For retail term deposit above Rs 5 lakh but below Rs 1 crore, the penalty is 1%.

Moreover, the interest shall be 0.50% or 1% below the rate applicable at the time of deposits for the period deposit remained with the bank or 0.50% or 1% below the contracted rate, whichever is lower. However, no interest will be paid on deposits which remain for a period of fewer than 7 days.

Loan facility: Subscribers can avail a loan or overdraft up to 90% of the money available plus accrued interest, at 1 per cent above the STDR rate.

TDS: SBI Reinvestment scheme is subject to a tax deducted at source. TDS is deducted at the prevalent income tax rate if Form 15G/15H not submitted.

Auto-renewal: SBI exercises an auto-renewal on the reinvestment plan if maturity instructions are not given.

Tax Benefits: Customers cannot claim tax on the invested amount as it is not a tax-saving fixed deposit.

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