How to Save Tax with IDBI Bank

IDBI Bank loans and mutual fund products can help you save a considerable amount of money that would otherwise be spent on taxe paying. This means when you purchase the financial products from the bank you get tax benefits as well.

Every year as we come to a financial end, we worry about a huge chunk of our income going towards the income tax payment. But, the Income Tax Act of India allows various deductions that can be claimed to save tax while filing your Income Tax Return. IDBI Bank alone offers a wide range of products that can help you save tax. You make deposits or invest in RGESS or invest in mutual funds or claim deductions on the interest that you pay towards your education loan or claim deductions on the premium you pay towards life insurance and medical insurance.

Save Tax with IDBI Bank:

IDBI Bank lets you save tax under the following Sections of the Income Tax Act, 1961:

Under Section 80C

The following are the deposit scheme that are offered by IDBI bank. Up to Rs.1,50,000 can be claimed as deductions. You can claim deductions for the following:

  • IDBI Freedom Deposit FD:
  • The deposit tenure ranges from 15 days to 20 years. Minimum deposit allowed is Rs.10,000. Senior Citizens get an additional 0.5% interest on deposits of 1 year and above. You get to choose if you want regular income. You can also reinvest the interest earned on the deposit. Sweep in facility and overdraft facility is allowed.

  • IDBI Suvidha Tax Saving Fixed Deposit:
  • This deposit scheme gives your tax benefits and higher returns on your investment. Up to Rs.5 lakh can be invested for 5 years. The lump sum amount can be availed at maturity only. You can apply for loans with IDBI Bank with minimum paperwork if you have this account.

  • IDBI Recurring Deposit:
  • You can make recurring deposits with fixed amount that starts from Rs.100 to less than Rs.1 crore each month. The amount will be deducted from your savings account. This enables you to save on a regular basis for a certain period of time. The tenure can range from 1 year to 10 years.

  • IDBI Godhuli Retail Term Deposit:
  • This deposit scheme automatically changes the interest rate to a senior citizen interest rate when you turn 60. Resident individuals below the ages of 55 only are allowed to take this scheme. There are two interest rates that are offered on this scheme. The first is for the period from booking till you turn 60 and the other is after you turn 60 years of age.

  • IDBI Floating Rate Term Deposit:
  • The interest rate offered is not fixed for the entire term and it makes it ideal for financially literate investor. The rates offered will align with the Bank’s Treasury Bill rate. The interest is paid on a quarterly basis. Loan up to 90% of the deposit amount can be availed. The account is automatically renewed. Premature withdrawals up to 1 year are not allowed. Minor can open this account jointly with a guardian. Senior Citizens get an additional 0.50% interest rate.

  • IDBI Public Provident Fund:
  • Individuals and on behalf of minors can open a PPF account. NRIs and HUFs are not eligible to open a PPF account. Minimum amount that can be invested is Rs.500 and the maximum amount is Rs.1,50,000 in a financial year. The maturity period is 15 years and it can be extended after maturity as well. Loan facility and nomination facility is offered with this scheme. Premature closure is not allowed but partial withdrawals can be made.

Under Section 80CCD

The investments made under the notified Pension Schemes will be eligible for deduction under Section 80CCD.

New Pension System is a voluntary defined contribution that is designed to enable the subscribers to make optimum decisions regarding their future. Any citizen even NRIs can join this scheme. Contributions up to Rs.1 lakh per annum is eligible for deductions under Section 80CCD.

Under Section 80D

The premium that you pay towards your medical insurance is eligible for tax benefits under the Section 80D. The products offered by IDBI for health insurance are as follows:

  • IDBI General Insurance:
  • Complete mediclaim coverage is offered to you and your family. The medical insurance is also known as Medical, Health and Family floater insurance. There are innovative covers and a wide range of benefits offered under this scheme. The scheme can be purchased online as well.

Under Section 24

Interest payment of up to Rs.1,50,000 per annum on IDBI home loan is eligible for deduction under the Section 24 of the Income Tax Act, 1961.IDBI Bank offers flexible repayment option and has customised loans for salaried, self-employed and for non-professionals. The following home loan products are offered by IDBI Bank:

  • Home Loan
  • Home Loan Top-up
  • Home Loan Interest Saver
  • Home Improvement Loan
  • Home Loan Takeover Facility
  • Home Loan Booking Finance
  • Home Extension Loan
  • Home Loan Refinance Facility
  • Loan on Second Charge or Pari-passu charge

Under Section 80E

Interest paid on the educational loan is eligible for tax benefits under Section 80E of the Income Tax Act, 1961. IDBI Bank aims to provide financial support to the deserving students who wish to pursue with the higher studies either in India or abroad. The following are the variants under which the educational loans are offered:

  • Loan for Non-Vocational Courses:
  • Up to Rs.10 lakh is offered for those who wish to study in India and up to Rs.20 lakh to those who wish to study abroad. Third party security is required for loan above Rs.4 lakh and below Rs.7.5 lakh. There is no need for security for loan below Rs.4 lakh. Loan above Rs.7.5 lakh will need either land or building or any other tangible security. Repayment term ranges from 10 – 15 years.

  • Loan for Vocational Courses :
  • Up to Rs.30,000 is offered for courses with duration up to 3 months. Up to Rs.50,000 is offered for courses with duration ranging between 3 – 6 months. Up to Rs.75,000 is offered for courses with duration ranging between 6 months to 1 year. Up to Rs.1,50,000 is offered for courses with duration above 1 year. Repayment tenure ranges from 2 – 7 years. 3rd party guarantee is required.

  • For other students secured admission through management quota:
  • Maximum loan offered is Rs.10 lakh. Primary security is mandatory. This is for the courses offered in India only.

  • Loan under Financial Inclusion Program:
  • Maximum loan offered is Rs.2 lakh. The repayment tenure ranges from 2 – 7 years. Interest is to be paid every month.

Under Section 80CCG

Taxpayers whose annual income is below Rs.12 lakh per annum are allowed an additional discount under the Section 80CCG for investing in Rajiv Gandhi Equity Saving Scheme.

IDBI offers Rajiv Gandhi Equity Savings Scheme – Series I Plan A. This is a close-ended growth scheme that offers income tax benefits.

  • Section 10(10D):
  • On surrendering the Life insurance policy offered by IDBI Bank you can claim deduction under Section 10(10D). IDBI offers Suvidha Savings Insurance Plan that ensures long term savings, accidental death benefit and life cover.

Under Section 80TTA

The interest that you earn on your savings account up to Rs.10,000 is eligible for deduction under this section 80TTA. IDBI offers the following savings accounts:

  • Suraksha Plus Savings:
  • This scheme provides savings benefits along with insurance cover. Accidental Insurance cover starts at Rs.100 and the Life Insurance Cover starts at Rs.413. There is no need for separate documentation for the insurance cover and there is no separate nomination required. The insurance is automatically renewed each year.

  • Super Savings Account:
  • This scheme offers fast transfer of funds, online option to pay bills, attractive interest rate, international debit card, travel and gift solutions and demand draft and pay orders.

  • SuperShakti Women’s Account:
  • This is a special savings account for women. You can also get a zero balance savings account for your child below the ages of 18 for free. The minimum balance to be maintained for metro and urban areas is Rs.5,000, Rs.2,500 for semi-urban areas and Rs.500 for rural areas. Women’s International Debit cum ATM card is offered. You get a personalised cheque book. 25% discount is offered in locker facilities and 50% discount on demat account.

  • Senior Citizen Account:
  • This account is offered to the Senior Citizens. It is a zero balance savings account and the account holder gets 25% discount on the locker charges and the higher ATM withdrawal limit is set at Rs.50,000 per day.

  • Being Me Account:
  • This is a special savings account offered for the youth. Account holder will get preferential rate on educational loan and preference to do project work with the bank. It also offers training on financial planning and discount on opening shares trading account. Account can be opened with a minimum of Rs.2,500. The account holder also gets a Debit card. The daily withdrawal limit is set at Rs.25,000.

  • Power Kids Account:
  • This account operates as a piggy bank for the kids. The minimum account balance required is Rs.500. The account holder gets an exclusive ATM card. The withdrawal limit is set at Rs.2,000. The account holder will also get a personalised cheque book.

  • Small Account (Relaxed KYC):
  • This savings account is meant for everyone and it is a zero balance account. You get a free debit cum ATM card and cheque book. You can access your account in multiple ways and there is no charge on the Electronic Fund Transfer and for the cash deposits made in any branch.

  • Sabka Basic Savings Account:
  • There is no need to maintain a minimum balance in this account. You get a free debit cum ATM card. No charges on EFT and cash deposits in any branch and the account can be accessed in any way.

  • Pension Saving Account:
  • This account can be used to plan your retirement. It is a zero balance account, there is no need to maintain a minimum balance and you get international debit cum ATM card. You also get a personalised cheque book.

  • Capital Gain Account:
  • This scheme facilitates you to save capital gain tax that you make from selling your house or property. This account can be availed by resident individual and HUF, sole proprietor, partnership firm and association of persons. The deposit can be made as savings or term deposit. Minimum amount allowed is Rs.10,000 maximum amount allowed is Rs.100 crore. 15 days to 20 years tenure is offered to any citizen and the senior citizens get 45 days to 20 years.

Under Section 88

Interest received on the IDBI PPF account is eligible for deduction under Section 88. Government of India has authorised IDBI Bank to receive subscriptions for PPF accounts. The minimum amount of investment is Rs.500 and the maximum is Rs.1,50,000. The maturity period is 15 years. Loan and nomination facility is available. Account cannot be prematurely closed but partial withdrawals are allowed.

IDBI Bank will help you save tax by letting you invest in a variety of tax saving schemes and also let you claim deduction on the interest payment made towards the loans.

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