HDFC Bank, one of the leading banks in India, offers competitive HDFC Tax Saving FD interest rates, presenting an attractive financial opportunity to earn stable returns. Regular fixed deposits (FDs) offer a secure way to grow your savings, while tax-saving FDs, like this scheme, combine fixed returns with valuable tax deductions under Section 80C of the Income Tax Act.
In this article, we will explore the key features, eligibility criteria, and documentation needed to open an HDFC Tax Saving FD. But before we dive into the details, let’s understand the concept of tax-saving FDs and check the HDFC Tax Saving FD interest rates.
What is HDFC Tax Saving 5-Years FD Interest Rate?
The HDFC Tax Saving FD is a financial product that combines the security of fixed deposits with the added advantage of reducing your tax liability. The HDFC Tax Saving FD interest rate under this scheme is 7.00% p.a. for regular citizens and 7.50% p.a. for senior citizens, making it an appealing choice for risk-averse investors. However, it’s important to note that the scheme comes with a 5-year lock-in period, requiring investors to carefully assess the liquidity of their investment.
The latest HDFC Tax Saving FD interest rate is:
| Tenure | HDFC Tax Saving 5-Years FD Interest Rate | |
| General Public (p.a) | Senior Citizens (p.a) | |
| 5 years | 7.00% | 7.50% |
What are the Features of Tax Saving FD Interest Rates in HDFC?
The HDFC bank provides numerous features on its Tax Saving FD scheme making it a valuable and safe investment choice:
- Deposit Amount: You can start investing in this scheme with a minimum amount of Rs. 100 and in multiples of Rs. 100 thereafter. The maximum investment allowed in a financial year is Rs. 1.5 lakhs.
- Lock-In Period: The HDFC Tax Saving FD comes with a lock-in period of 5 years. During this time, premature withdrawals are not permitted, ensuring your investment remains intact.
- Interest Payout Options: Investors have the flexibility to choose between monthly and quarterly interest payouts or let the interest accumulate until maturity.
- Joint Deposits: In the case of joint deposits, tax benefits under Section 80C can be availed only by the primary account holder.
- Additional Interest for Senior Citizens: Senior citizen FD depositors can enjoy an additional HDFC Tax Saving FD interest rate of 0.50% p.a. over and above the regular Tax Saving FD HDFC rate of interest.
- Reinvestment Option: You have the option to reinvest the interest earned, further boosting your returns.
- No Loan Facility: Unlike regular FDs, you cannot avail of a loan against your HDFC Tax Saving FD during the lock-in period.
- Interest Calculation: The interest, calculated quarterly at the specified interest rate, provides you with the option for reinvestment. This means that every three months, your interest will be calculated, and if you choose reinvestment, the principal amount is adjusted to reflect the interest earned.
What are the Tax Deductions on HDFC Tax Saving FD?
The interest income earned from HDFC Tax Saving FD is taxable and falls under the category of “income from other sources” in your income tax return. The interest earned is added to your total income for the fiscal year and is taxed at your applicable income tax slab rate.
The amount you invest in HDFC Tax Saving FD is eligible for tax deduction under Section 80C of the Income Tax Act, up to Rs. 1.5 lakhs.
For HDFC Tax Saving FD, TDS is deducted at a rate of 10% if the interest income exceeds Rs. 40,000 in a financial year (Rs. 50,000 for senior citizens). However, if PAN details are not provided, TDS will be levied at a higher rate of 20%. Here’s what you need to know:
- PAN Requirement: Section 206AA mandates that anyone receiving income on which TDS is deducted must provide their PAN. Failure to provide PAN results in a higher TDS rate of 20%.
- Form 15G/15H: Investors can submit Form 15G or Form 15H to the bank to prevent TDS deductions if their expected total income for the fiscal year falls below the taxable limit. These forms need to be submitted annually, and they are essential for tax exemption.
HDFC Bank issues TDS certificates at the end of each quarter during the fiscal year, specifying the amount of TDS deducted.
What are the Eligibility Criteria for Opening an HDFC Tax Saving FD?
You can invest in an HDFC Tax Saving FD if you are an Indian resident or part of a Hindu Undivided Family (HUF).
What are the Documents Needed to Open HDFC Tax Saving FD?
To open an HDFC Tax Saving FD, you will need to provide specific documents for verification:
For Individual Investors:
- PAN Card
- Aadhaar Card
- Passport-sized Photograph
- Proof of Age (for senior citizens)
- Completed Application/Undertaking Form
For Hindu Undivided Family (HUF):
- Self-attested PAN Card
- HUF Declaration Deed
- HUF’s Bank Statement
Conclusion
Investing wisely involves securing your finances and optimising your tax savings, and HDFC Bank’s Tax Saver FD Scheme, with its attractive HDFC Tax Saving FD interest rates, accomplishes both of these objectives. Now that you have a comprehensive overview of HDFC Tax Saving FD interest rates and its features, take the time to thoroughly review the scheme to make informed investment decisions.
HDFC Tax Saving FD Interest Rates FAQ’s :-
No, the HDFC Tax Saving 5 years FD is not tax-free. However, it is eligible for tax deductions under Section 80C of the Income Tax Act, of 1961. This means you can claim a deduction of up to ₹1.5 lakh on your investment in an HDFC 5-year FD in a financial year.
The latest HDFC Tax Saving FD interest rates for a 5-year FD is 7.00% p.a. for the general public and 7.50% p.a. for senior citizens.
Yes, you can prevent TDS deductions by submitting Form 15G or Form 15H to the bank if your expected total income for the fiscal year is below the taxable limit.
Yes, the HDFC Tax Saving FD interest rates remain fixed for the entire tenure of 5 years.
Yes, HDFC Tax Saving FD is a smart investment for people seeking a safe and reliable option with assured returns and tax benefits. Just keep in mind that it comes with a lock-in period where you can’t withdraw your money prematurely.
