Investments are one of the best ways to secure your future and lead a financially independent life. Among other investment vehicles like real estate and stocks, putting your money in fixed deposits (FD) is a much safer option to go for. Additionally, there are certain FD schemes that let you enjoy tax exemptions on the amount.
State Bank of India (SBI) offers the Tax Saving Fixed Deposit Scheme, 2006, with which you can get tax exemptions on your investments. The scheme comes with a lock-in period of 5 years. Let's know a bit more about this plan.
General depositors can get 6.85% p.a. as interest whereas senior citizens can get 7.35% p.a. You can deposit a minimum of Rs.1,000 and a maximum of Rs.1.5 lakh with this scheme. The lock-in period is 5 years before which you cannot withdraw funds from your FD account. Note that the interest rates are subject to change as per the discretion of the bank.
*Interest rates are subject to change at the discretion of the bank
Summary of SBI Tax Saving Scheme FD features:
|
Account type |
Term deposit/Special term deposit |
|
Amount |
Minimum: Rs.1,000 Maximum: Rs.1.5 lakh |
|
Period |
Minimum: 5 years Maximum: 10 years |
|
Interest rate |
|
|
Premature withdrawals |
Withdrawal not allowed before the lock-in period of 5 years |
|
Loan |
Loan against this FD isn't available |
|
Nomination |
Available |
It's recommended to calculate your SBI FD interest rate before hand so that you know how much returns you will receive in the future. In order to do that, you can use any online fixed deposit calculator. The easy-to-use online tool lets you calculate the maturity amount in no time. All you need to do is enter the relevant details, including the deposit term, investment amount, and the rate of interest.
| Eligibility to Open a FD |
|
| Documents Required |
|
| Benefits of a SBI tax saving FD |
|
Residents of India or any undivided Hindu families with a Permanent Account Number (PAN) are eligible for this facility.
The minimum tenure is 5 years within which you won't be able to withdraw funds from your account. However, after 5 years you may choose to close your account pre-maturely. But this has to be done from the home branch. Note that the maximum deposit period is 10 years.
No, only the first holder is eligible for tax exemption under Section 80C.
No, you won't be able to do that. The maturity amount can only be transferred to the account from where the FD investment took place.
You can use savings, current, or overdraft account to open your deposit account. However, make sure that the account is an active one.
No, you have to collect your account receipt from the home branch.
You can deposit a minimum of Rs.1,000 and a maximum of Rs.1.5 lakh in a year.
*All amounts, tenures, repayment requirements, interest rates, charges, fees, ceilings, requirements, criteria, exclusions, terms and conditions are as of April, 2019
Useful Information on SBI Fixed Deposit
Other Fixed Deposit Schemes Offered by SBI
State Bank of India or SBI recently announced a steep slash in its fixed deposit interest rates. The move has raised hopes of the bank reducing its lending rates as well. One of the top lenders in India, SBI, said that it will bring down the interest rate on its retail long-term fixed deposits by up to 20 basis points. The bank also announced that it will slash rates by up to 35 bps for bulk deposits. For short-term deposits leading up to 179 days, the bank plans to slash rates by 50 to 75 basis points.
While speaking to the media, SBI CFO, Prashant Kumar said that the liquidity position has become more balanced compared to the situation in May and that the interest rates are also coming down. He further stated that the move is like a steppingstone to lowering of interest rates. He said that the extent of lowering of rates will be decided after the bank’s asset-liability committee meet in August.
Earlier this month, Reserve Bank of India (RBI) governor Shaktikanta Das expressed concern for transparent transmission of interest rate cuts after the central bank lowered the key repo rate by 75 basis points in 2019. The concern expressed by the governor prompted banks to act faster on the transmission of rate cuts.
1 August 2019
One of the most popular banks in the country, State Bank of India (SBI) offers a wide range of investment opportunities to the general public. The term deposits and other saving schemes come with a promise of high returns at competitive interest rates. SBI Tax Savings Scheme, 2006 and SBI Flexi Deposit Scheme were launched by the bank to provide an opportunity for investors to boost their savings.
Key features of the SBI Tax Savings Scheme, 2006
The SBI Tax Savings Scheme, 2006, is a variant of a term deposit that can be availed by any Indian resident or the Karta of the Hindu undivided family. The prerequisite to apply for this scheme is to have a Permanent Account Number (PAN). The limit for deposit per financial year lies within Rs.1,000 and Rs.1,50,000. The minimum lock-in period for the deposit is 5 years and the maximum tenure is 10 years. An account holder cannot prematurely withdraw funds before 5 years. The account holder can enjoy tax benefits of up to Rs.1.5 lakh as prescribed in the section 80C of the Income Tax Act, 1961. SBI provides nomination facility for this scheme. However, they cannot apply for a loan against the deposit.
Main features of the SBI Flexi Deposit Scheme
The SBI Flexi Deposit scheme is similar to the Recurring Deposit (RD). However, unlike an RD, where an investor has to make regular monthly deposits of a fixed amount, Flexi Deposit lets you alter the instalments. Flexi Deposit scheme allows variations in instalments with respect to frequency and size of the deposit. The lower limit of the instalment is Rs.500 and the maximum number of instalments is 10. In a financial year, the amount deposited must be within the range of Rs. 5,000 and Rs.50,000. The account holder can base the frequency of the instalments upon their frequency. The tenure lies within 5 years and 7 years. The interest income earned is subject to Tax Deducted at Source (TDS) as mandated by the Income Tax Act, 1961. SBI allows loans to be taken against the Flexi Deposit and a nomination facility as well. A penalty of Rs.50 will be charged for non-deposit instalments. An account holder can avail for premature withdrawal at an interest rate lower by 0.50% of the original rate.
16 August 2018
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