In this article we tell about some Income tax top 6 bank offer these interest rates on tax saving fixed deposits & Some tax saving FD details
Income Tax-saving FD details
There is a five-year lock-in period on this FD account, during which time the invested cash cannot be withdrawn. For those wishing to avoid taxes and receive a set return on their investment, this is a feasible alternative because the interest generated is taxable and the interest rate differs between banks. The only entities eligible to open this tax-saving fixed deposit are individuals and Hindu Undivided Families. One may make deposits under a single or joint name. The first holder is eligible for the Income Tax advantage, per standards set forth by the Government of India
Beneficial rate to senior citizen: Senior citizens can get a better rate of interest on such deposits. Bank of Baroda pays 0.5% over and above the tax saving FD rates to senior citizens. This is available for deposits below Rs. 1 crore.
Tax Saving FD Benefits
According to Bank of Baroda, below are the benefits of investing in tax saving FDs.
Tax savings: The principal amount invested as a tax saving FD is allowed as a deduction to the first holder of the FD under Section 80C of the Income Tax Act. The maximum deduction allowed in a financial year is Rs. 1,50,000.
Nomination facility available: It is possible to set up nomination for the tax saving FD.
Branch transfer: The tax saving FD can be transferred from one branch to another branch at the request of the customer. This can be done by submitting a written request to the branch where the customer has the tax saving FD.
Minor accounts for individuals: It is possible to open a tax saving fixed deposit for minors as well. These tax saving deposits can serve as important means of financial planning for them .
Most major banks offer interest rates upward of 7 percent per annum on tax-saving fixed deposits (FDs). These deposits have a 5-year lock in period and the maximum deposit amount is ₹1.5 lakh
Conservative investors often invest large sums in fixed deposits to earn assured returns on a regular basis, insulated from wild volatility of markets. Besides regular FDs, investors also explore tax-saving fixed deposits (FDs) for earning higher interest while also saving some money via tax exemption.
It is imperative to know that the tax deduction under section 80C is allowed only on the amount deposited in the fixed deposit, while the interest earned on it is taxable.
When you happen to opt for joint deposit, the tax benefit under section 80C is extended only to the first holder of the deposit.
It is vital to remember that the minimum amount is ₹100 while the maximum which one can deposit is ₹1.5 lakh in one financial year.
Banks offer following interest rates on tax saving FDs:
HDFC Bank: The largest private lender offers 7.00 percent to its regular citizens. Senior citizens are entitled to receive an extra 50 basis points. One can opt for both monthly and quarterly payout of interest.
ICICI Bank: The second largest private lender offers 7 percent on tax saving FD to regular citizens and 7.50 percent to senior citizens. The bank enables depositors to opt for monthly or quarterly pay out of interest.
Kotak Mahindra Bank: The bank offers the same interest as on regular fixed deposits (FDs). On a five-year FD, the private lender offers 6.20 percent interest rate per annum.
State Bank of India (SBI): The largest state lender also offers the same interest rates as on regular fixed deposits, i.e., 6.50 percent per annum. The minimum amount is ₹1,000 and the maximum is ₹1.5 lakh. The longest period of deposit is 10 years.
Punjab National Bank (PNB): The second largest state lender offers 6.50 percent to regular citizens and 7 percent to senior citizens on tax saver fixed deposits.
Yes Bank : This bank also offer 7% interest rate that looks very good for investment
