I was looking into SBI’s Annuity Deposit Scheme and wanted to understand more, has anyone here tried it? What benefits, risks, and tax rules should I know from personal experience?
I was also curious about this because many of us want a fixed monthly income but are not sure what is good or bad in the SBI Annuity Deposit Scheme.
Benefits, risks and tax rules of SBI Annuity Deposit Scheme
-
Fixed money every month : You put in a lump sum once. The bank sends back part of that money plus interest every month for the years you choose. The amount does not change, so you know exactly what will reach your account.
-
No need to visit the branch : You can open the plan through net banking or any SBI branch. After that, the monthly amount comes to your savings account automatically.
-
Extra half percent for seniors : If you are sixty or above, the bank adds 0.50 % to the normal rate. This makes the monthly cheque a little bigger than for general citizens.
-
No maximum limit : You can start with as little as one thousand rupees a month. There is no upper cap, so you can put in any big amount you have.
-
Loan if you need cash : The bank can give you up to seventy-five percent of your deposit as a loan in special cases. Monthly payouts then go to the loan account until it is cleared.
-
Risk of low money later : The plan ends in three, five, seven or ten years. After that, the monthly income stops. If rates are lower at that time, you may get less money when you open a new plan.
-
No principal back at the end : Each month you receive part of your original money plus interest. When the plan ends, nothing is left in the account because you have already taken it out month by month.
-
Tax is taken before you get the money : The bank cuts TDS on the interest part if it crosses the limit. The monthly amount you see in your hand is after this tax, so you need not pay again at the bank counter.
Key Points to Know Before Investing
| Category | Details | Why It Matters |
|---|---|---|
| Type of Investment | Fixed monthly annuity scheme | Good for those who want a steady income |
| Tenure Options | 36, 60, 84, or 120 months | Helps you plan short or long-term income |
| Interest Payout | Monthly (includes interest + principal) | Useful for regular expenses |
| Premature Withdrawal | Allowed only under certain conditions with penalty | Important to plan carefully |
| Tax Treatment | Fully taxable; TDS applicable | Affects net monthly payout |
| Safety | Backed by SBI | Low risk compared to private schemes |