How much interest will you get on depositing ₹ 1 lakh in SBI FD for 180 to 210 days? Understand complete financial accounts

If you have surplus funds worth ₹1,00,000 (one lakh rupees) and you are going to need it for something (like children’s school fees, home renovation or some event) within the next 6 to 7 months, then parking it in a bank FD instead of leaving it in a normal savings account is a wise financial move. State Bank of India (SBI), the country’s largest commercial bank, offers a special tenure bucket of 180 days to 210 days for short-term investors. Under the current interest rates structure, while 5.65% per annum interest is being given to general citizens for this period, senior citizens are being given an additional benefit of 50 basis points (0.50%). 6.15% per annum An attractive rate of Rs. Let us understand how much actual income you will earn on an investment of ₹1 lakh at an interest rate of 6.15% per annum.

As per Indian banking rules and Reserve Bank of India (RBI) guidelines, the principle of Simple Interest applies for periods of less than 182 days (approximately six months) and Quarterly Compounding for periods of six months or more. Since the 180 to 210 day period sits around 6 to 7 months (0.493 years to 0.575 years), the interest is calculated on a day-to-day basis as follows:

• Total Principal Deposit: ₹1,00,000 (one lakh rupees)

• Applicable Annual Interest Rate: 6.15% per annum (Senior Citizen Rate)

• Daily Interest Rate: Approximately ₹16.85 per day ($\frac{₹1,00,000 \times 6.15\%}{365}$)

• Option 1: On completion of exactly 180 days (approximately 6 months):

  
  

  • Interest Earned: About ₹3,033

  • Total Maturity Amount: ₹1,03,033

• Option 2: On completion of maximum 210 days (approximately 7 months):

  
  

  • Interest Earned: About ₹3,538

  • Total Maturity Amount: ₹1,03,538

Thus, in this safe period of just 6 to 7 months, your capital of ₹ 1 lakh can be invested without any stock market risk. Net fixed interest ranging from ₹3,033 to ₹3,538 Is added to your account.

There are several practical benefits of investing in this short tenure FD:

• Sovereign level security: State Bank of India is a ‘Domestic Systemically Important Bank’ (D-SIB), in which your deposits are completely safe. Also, under DICGC, capital up to ₹ 5 lakh gets full government insurance protection.

• Premature Withdrawal: If you suddenly need money before 180 days, you can break this FD prematurely. SBI returns the money by deducting a nominal penalty of only 0.50% on retail FDs up to ₹ 5 lakh and paying interest for the remaining days.

• Loan and Overdraft Facility: Instead of breaking your FD in an emergency, you can also take an instant gold loan or overdraft (OD) up to 90% of your FD, which charges only 1% more interest than the FD rate.

It is important to keep in mind the income tax rules while investing in bank fixed deposits:

• TDS deduction limit: Under income tax rules, if the total interest income from all bank FDs for senior citizens in a financial year is less than ₹50,000 (₹40,000 for general citizens), the bank does not deduct any TDS. Since this interest (approximately ₹3,538) on ₹1 lakh is well below the prescribed limit, no TDS will be directly deducted by the bank on it.

• Liability as per tax slab: Although the bank will not deduct TDS, the interest earned will be added to your annual income as ‘Income from other sources’. If your total annual income is less than the taxable limit, you can be completely exempted from TDS deduction by submitting Form 15H (for senior citizens) or Form 15G to the bank.

It is very easy to open this short-term fixed deposit in SBI. Existing customers of the bank can login to ‘YONO SBI’ app on their smartphone or internet banking (onlinesbi.sbi) and go to ‘Deposits’ section and select ‘Open Fixed Deposit’. There select ‘Days’ in the period and enter 180 to 210 days. Additionally, you can also start this FD instantly through a checking or savings account by simply visiting your nearest SBI branch and filling a one-page form.