Income from other sources including savings — is generally taxable. To know the actual gains on your investments, tax rates are one of the factors that need to be deducted from your infused capital in various schemes. However, banks and other financial service providers do offer tax benefits in various investment pools that allow investors to minimise their taxable payments. Some of these schemes are fixed deposits and small savings schemes. A depositor can achieve tax deductions up to ₹1.5 lakh in these schemes.
Here’s the list along with interest rates:
Fixed deposits (FDs):
FDs are one of the safest and most traditional investments currently in India. Generally, it is among the likable investment tool as it offers guaranteed returns and comes with the benefit of being risk-free. You can also insure your FDs against threats or losses. Further, the FDs can also be used for loan requirements, however, the terms and conditions vary from bank to bank. Senior citizens tend to earn an additional interest rate on FDs offered by banks.
Currently, many banks and NBFCs have hiked their FD interest rates following RBI’s rate hike trends. Check latest rates and tax benefits:
SBI Tax Saving FD
The largest PSB, the State Bank of India (SBI) offers Tax Saving Scheme with a lock-in period of 5 years. Under the scheme, the minimum tenure is 5 years, and the maximum is up to 10 years. The interest rates are compounded quarterly. However, the bank does not offer loans or advances against these deposits during the lock-in period. The minimum deposit here is about ₹1,000 or multiples thereof, while the maximum deposit can be up to ₹1.5 lakh in a year. The interest rate is applicable to term deposits.
SBI offers a 5.65% interest rate on FDs maturing from 5 years to 10 years to the general category, while senior citizens earn up to 6.30%. These are on FDs below ₹2 crore.
ICICI Bank Tax Saver FD
Meanwhile, ICICI Bank offers Tax Saver FD with a 5-year lock-in period as well. Investment can begin as small as ₹10,000 and maximum up to ₹1.5 lakh for a duration of 5 years. No premature withdrawal and auto-renewal facility is available under the scheme. The interest rate payout is monthly, quarterly, or reinvestment in principal.
On FDs below ₹2 crore, ICICI Bank offers a 6.10% rate to the general category for 5 years under the tax saving scheme. While senior citizens can earn up to a 6.60% rate.
RBL Bank Tax Saving FD
RBL Bank offers a flexible and secured FD scheme with dual tax benefits and attractive returns. A depositor can save tax between ₹100 to ₹1.5 lakh. The tax-saving FD scheme has a tenure of up to 5 years. On tax-saving FDs below ₹2 crore, RBL Bank offers 6.55% to the general category and 7.05% to senior citizens.
These banks offer tax exemption up to ₹1.5 lakh under section 80C of the Income Tax Act. Notably, TDS is applicable at a prevalent rate. Form 15G/15H is required to be submitted by the depositor to get an exemption from tax deduction as per Income Tax Rules.
Notably, the TDS rate on FDs is 10% for Indian residents. However, if Permanent Account Number (PAN) details are not provided under the FD account, then the TDS rate will be as high as 20%.
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