Tax Saver Fixed Deposits in India are a specialised financial instrument. They offer tax deductions under Section 80C of the Indian Income Tax Act. These deposits are available as Single Holder Type or Joint Holder Type accounts. It’s important to note that tax benefits primarily apply to the primary account holder in joint accounts. The maturity period for these deposits is set at 5 years, and they extend tax benefits to various individuals, including senior citizens and NRIs. However, it’s essential to understand that the interest earned on the fixed deposits does not qualify for tax deductions, nor can it be used as loan collateral. Get exclusive information about tax saving fixed deposit SBI, including their interest rates, eligibility criteria, documentation requirements and much more.
SBI (State Bank of India) is India’s largest commercial bank. It leads the banks in terms of assets, branches, deposits, client base, and workforce. Serving a wide range of clients, including individuals, large corporations, commercial enterprises, public entities, and institutional customers, SBI is committed to providing its customers with transparent, reliable, and cutting-edge financial solutions. If thinking how to save taxes on SBI fixed deposit while earning attractive interest rates, the SBI Tax Saving Fixed Deposit Scheme is a great option. One can contribute up to Rs. 1.5 lakh in a lump sum and enjoy tax deductions under the Income Tax Act, 1961. As an added benefit, senior citizens can earn an additional 0.50% interest on their fixed deposits within this scheme. By participating in SBI five year fixed deposit for tax saving scheme and meeting the lock-in requirement, individuals can secure tax exemptions on their deposits.
Below are the interest rates applicable to retail domestic term deposits of less than Rs. 2 crores:
|For the General Citizens
|For the Senior Citizens
|5 Years – 10 Years
Here are some important considerations to keep in mind when thinking about investing in fixed deposit to save income tax SBI:
- Before making any investment decisions, it’s essential to compare the interest rates offered by various banks. Opting for a higher interest rate can potentially result in improved long-term returns.
- Before investing in tax-saving deposits, it’s important to consider that these typically have a lock-in period of 5 years.
- It’s important to mention that investments in tax-saving deposits can qualify for a deduction of up to 150,000 rupees per Section 80C of the Income Tax Act.
- It’s important to note that the interest earned on tax-saving deposits is taxable. TDS may be applicable if the interest earned exceeds Rs. 40,000 in a financial year.
- Find out if one is eligible for a higher interest rate on tax-saving deposits offered by certain banks to senior citizens.
- To ensure accurate tax reporting, it is important to keep detailed records of investments. Please note that the interest earned on tax-saving deposits may not be reflected in Form 26AS.
- There are various convenient ways to invest in tax-saving deposits. One can choose to do it through net banking, mobile banking, or by visiting a bank branch.
- Before deciding to invest in tax-saving deposits, make sure to understand the terms and conditions that come with them thoroughly.
- Only resident Indians can open a tax-saving fixed deposit account under the SBI Tax Saving Scheme, 2006.
- The account can be opened either by an individual for themselves or as the Karta of a Hindu Undivided Family (HUF), provided they have a valid PAN (Permanent Account Number).
- The minimum tenure for an SBI Tax Saver Fixed Deposit is 5 years.
- The maximum tenure for this type of fixed deposit is 10 years.
Minimum Deposit Amount
- The minimum amount required to open an SBI Tax Saver Fixed Deposit is Rs. 1,000.
Maximum Deposit Amount
- The maximum deposit amount allowed in a financial year is Rs. 1,50,000.
- Premature withdrawal is not permitted before the completion of five years from the date of issue. The deposit must be held for at least five years to avail of tax benefits.
To initiate the process of opening an SBI Tax Saver Fixed Deposit account, it’s imperative to furnish the necessary documentation for identity verification and proof of address. The following documents may be accepted for this purpose:
- Passport: A valid passport can serve as both proof of identity and proof of address, making it a comprehensive document for account opening.
- Voter’s Identity Card: A Voter’s Identity Card is a recognised document for identity verification. However, it is advisable to complement it with another document for address proof.
- Driver’s Licence: A valid Driver’s Licence is commonly accepted as a proof of identity and is often used for address verification.
- Aadhaar Letter/Card: Aadhaar Letter or Aadhaar Card, issued by the Unique Identification Authority of India (UIDAI), is a document that holds significant recognition for identity verification and address verification purposes.
- NREGA Card: The National Rural Employment Guarantee Act (NREGA) Card is an acceptable document, primarily for identity verification, but it may also be used for address proof ins.
- PAN Card: Possessing a Permanent Account Number (PAN) Card is mandatory for tax-saving purposes when opening a Tax Saver Fixed Deposit account. It functions as a crucial form of identification.
To enrol in the SBI Tax Saving Scheme through the online platform, follow these straightforward steps:
Step 1: Access the Online SBI Banking Portal.
Begin by logging into your SBI online banking account using a username and password.
Step 2: Navigate to e-fixed Deposit.
Once on the homepage, locate the menu on the top and click the ‘e-fixed deposit’ option.
Step 3: Select e-TDR/e-STDR.
Under the ‘Income Tax Saving Scheme’ category, click on ‘e-TDR/e-STDR’ and proceed as prompted.
Step 4: Choose Account.
Choose the account from which you wish to deduct the amount, enter the fixed deposit (FD) amount, and, if necessary, specify the account.
Step 5: Customise FD.
Opt for either non-cumulative or cumulative fixed deposit, choose the desired tenure, agree to the terms and conditions, provide maturity instructions, and then hit the ‘submit’ button.
Step 6: Confirmation Message:
You will receive a confirmation message, displayed on your screen.
Below are the benefits of the SBI Tax Saving FD scheme:
- Convenient Automatic Renewal: The SBI Tax Saving FD Scheme offers a seamless automatic renewal option once the fixed deposit matures. This feature eliminates the need for manual renewal, as the FD will be renewed automatically for the same duration. Rest assured that funds will continue to earn interest at the current rates without any hassle.
- Nomination Facility: With SBI’s Tax Saving FD account, one can also take advantage of their nomination facility. This important feature allows to designate a nominee who will have the authority to claim the proceeds of the FD account in the event of one’s unfortunate demise. It provides a sense of financial security and peace of mind for account holders and their families.
- Convenience of Online Operations: Another significant advantage is the convenience of managing the Tax Saving FD account online. SBI provides online access, allowing one to quickly open, manage, and monitor the FD account from the comfort of one’s home or office. This eliminates the need for cumbersome paperwork and saves valuable time in handling investments.
- Tax Benefits: One of the primary purposes of a Tax Saving FD Scheme is to provide tax advantages under Section 80C of the Income Tax Act. Investing in this scheme, one can claim deductions on the amount invested up to the specified limit. This can substantially decrease their taxable income.
TheState Bank of India Tax Saving Fixed Deposit Scheme offers Indian residents a valuable opportunity to save taxes while earning attractive interest rates. This scheme has a minimum lock-in period of five years and a maximum tenure of ten years, ensuring both security and tax efficiency for growing savings. It is important to compare interest rates offered by different banks, maintain investment records, and understand the associated terms and conditions. Overall, the SBI Tax Saving Fixed Deposit Scheme presents itself as a smart choice for individuals aiming to optimise their tax savings and secure their financial future.
Tax Saving Fixed Deposit SBI FAQs:-
The State Bank of India Tax Saving fixed deposit requires a minimum investment period of 5 years. One can choose to keep their deposit for up to a maximum of 10 years.
Yes, senior citizens typically enjoy a preferential interest rate compared to the standard deposit rates.
Investing in the SBI Tax Saving Fixed Deposit comes with the advantage of offering tax benefits on deposits of up to INR 1.5 lakhs, in accordance with Section 80C of the Income Tax Act. Moreover, SBI offers an appealing interest rate for this tax-saving FD, making it an attractive investment opportunity worth considering.
One can initiate their Tax-saving Fixed Deposit with a minimum deposit as low as ₹100. To qualify for a Section 80C deduction, the maximum allowable deposit in a financial year is ₹1.5 lakhs.