There are many financial instruments available for tax saving and the SBI Tax Savings Scheme, 2006 is a good option. The State Bank of India (SBI) offers the Tax Saving Fixed Deposit Scheme, 2006, that provides tax exemptions under Section 80C allowing for a tax deduction of up to Rs 1.5 lakh per annum.
The interest rate for general customers is 5.5 percent and for senior citizens it is 6.3 percent. The scheme has a lock-in period of 5 years and a 10-year maximum deposit period.
The SBI Tax Savings FD Scheme
The minimum deposit for the SBI Tax Saving FD Scheme is Rs 1,000 and in multiples thereof and the maximum deposit is Rs 1.5 lakh per year. The minimum deposit for senior citizens is Rs 10,000. Also, the maximum deposit amount in a financial year should not exceed Rs 1.5 lakh to claim tax deduction under Section 80C.
How to open a Tax Saving Scheme FD for SBI Internet banking users
- Login to your SBI net banking facility using credentials
- In the ‘Fixed deposit’ tab click on ‘e-TDR/ eSTDR FD’
- Select e-TDR/ eSTDR under Income Tax Saving Scheme
- Tap on ‘Proceed’ button
- Select account and the amount and check on the accept the Terms and conditions box and click ‘Submit’
- Click ‘Confirm’ on the page. In the next page all details of your SBI tax saving FD will be available.
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Taxation
Investments of amounts up to Rs 1.5 lakh in a financial year qualify for tax deduction under Section 80C of the Income Tax Act.
In case the interest payments on FDs with a single bank exceed Rs 10,000 in a financial year, TDS will be deducted by the bank. To avoid this, one can fill and submit Form 15G or Form 15H, as per need.
Interest and principal on the SBI Tax Saving FD Scheme will be paid at maturity to the depositor. Interest will be calculated at quarterly rests. The scheme has a nomination facility, and no loan is available against the deposit during the 5-year lock-in period. No part of the deposit can be withdrawn before the lock-in period except in the event of the depositor’s death. The SBI Tax Savings FD Scheme can be transferred from one branch to another.
