Many commercial banks in India including the ‘SBI’ offer income tax benefits under a special type of fixed deposit or FD account. A person can avail the income tax benefit against his or her investment - up to Rs. 1.5 lakh in a financial year, under Section 80C of the Income Tax Act.
According to State Bank of India’s official website, this special type of FD that is also known as tax-saving fixed deposit allows a minimum maturity period of 5 years and a maximum of 10 years.
Eligibility, Features & Benefits of SBI's Tax Saving Fixed Deposit (FD)
Below we have mentioned everything that you must know about State Bank of India’s tax saving fixed deposit:
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According to SBI, resident of India as an individual or in the capacity of Karta of the Hindu Undivided Family (HUF) can invest in the special tax saving scheme. To invest in this scheme, you need to have a PAN card (Permanent Account Number).
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A person can open a tax saving fixed deposit (FD) with a minimum amount of Rs. 1000.
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The maximum amount that you can deposit under the SBI’s tax saving FD scheme is Rs. 1.5 lakh in a year.
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The names, mode of operation & home branch of the tax saving deposit account is similar to the debit account, from where fixed deposit account is funded. But, in case of joint accounts, the 1st holder is eligible for deduction from income under section 80C of Income Tax Act, as per the bank website.
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The rate of interest in this scheme is also similar to that on FDs. The bank has revised its interest rates on term deposits with effect from 1 August, 2019. The rate of interest for retail deposits below Rs. 2 crore is 6.50% for general public & 7% for senior citizens in maturity period of five years and up to ten years.
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It must be noted that customers cannot withdraw the FD before the expiry of 5 years from the date of its receipt.
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Premature closure of FDs under the tax saving scheme is also not permitted during the lock-in period. Investors can close it after 5 years through the home branch only. In case of demise of depositor, legal heir can pre-maturely seal it through home branch.
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Senior citizen of the country can get additional interest rate under tax saving fixed deposit scheme by exercising the appropriate option. The date of birth (DOB) in bank's record is considered for age confirmation. The minimum days & minimum amount applicable for extra rate of interest for senior citizen is according to bank's policy. In case of joint accounts, the benefit can be availed only if the 1st account holder qualifies for it.
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Apart from this, a nomination facility is also provided with the SBI's tax saving scheme.
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Last but not the least, you cannot use the deposit account to secure loan or as security to any other asset.
