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Why NHB Suvridhi tax deposit is better than bank tax deposit?


Why NHB Suvridhi tax deposit is better than bank tax deposit
Not many investors know that the National Housing Bank (NHB) has a tax savings deposit called the NHB Suvridhi Deposits. Now, these deposits are more less identical in features to the bank tax savings deposits.

However, where the NHB Tax Savings Deposit score over the PSU and other banks tax savings deposits is when it comes to interest rates.


The NHB Suvridhi Deposit offers an interest rate of 9.25 per cent, as compared to present interest rate on bank tax savings deposit, which can fetch you a rate of around 9 per cent in most public sector banks. Interestingly, the rate for Senior Citizens is also higher and placed at 0.60 per cent, as compared to 0.50 per cent at most banks.

National Housing Bank is a government owned institution and hence the deposits are relatively secure. The annualized return works out to 9.22 per cent, which is reasonable.

The deposits as in the case of bank deposits have a lock-in of 5 years. The deposit offers a tax benefit under section 80C of the Income Tax Act, which permits up to a maximum tax benefit of Rs 1 lakh under Section 80C.

One can opt for an interest payment of quarterly or can chose the cumulative option under the scheme.
Deduction of Income-tax at source from interest payments will be governed by the provisions of the Income Tax Act, 1961, as in force from time to time, and the rules frame there under. As per the present provisions U/S 194A of the Income Tax Act, 1961, interest upto Rs. 5000/- in a financial year is exempt from deduction of tax at source.

The National Housing Bank is owned by the Reserve Bank of India and helps promote a sound, healthy, viable and cost effective housing finance system

Read more about: nhb suvridhi deposit
Story first published: Wednesday, March 20, 2013, 9:09 [IST]
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