It's time for planning your tax savings as the financial year is drawing to a close. Bank tax saving fixed deposits give you a tax break under Sec 80C of the Income tax Act to the tune of Rs 1.5 lakhs each year.
|Bank||Interest Rate Per Annum|
|TamilNad Mercantile Bank||9.00%|
|Abhudaya Coop Bank||9.00%|
|KVB Tax Shield Deposit||8.90%|
|SBI Tax Savings Deposit||8.25%|
|ICICI Bank Tax Saver Deposit||8.50%|
|PNB Tax Saver Deposit||8.50%|
|Canara Bank Tax Saver Scheme||8.75%|
|Bank of Baroda||8.50%|
|Syndicate Bank Tax Shield Scheme||8.50%|
|Bank of India Star Sunidhi|| |
Other Details of Tax Savings Deposit Schemes
The minimum amount that can be placed in these deposits varies from banks to banks. The minimum that private sector banks charge is around Rs 10,000, while it is lesser in the case of public sector banks.
There is a compulsory lock-in of the amount for a period of 5 years. It's also important to remember that there is no loan that is available for these deposits. The maximum amount that one can invest in these deposits is Rs 1.5 lakhs. This is also the maximum tax benefit that one can get by investing in these deposits.
Senior citizens tend to receive slightly higher interest rates on these deposits to the tune of an extra 0.50 per cent.
Banks do not allow a facility of auto loans on these deposits.
Is TDS Applicable?
Yes, tax would be deducted at source on these deposits by the bank where the interest income exceeds Rs 10,000.
Are Tax Savings Bank Fixed Deposits The Best Around?
Probably, the Public Provident Fund is a better option when it comes to investing for the purpose of Sec 80C to save tax. This is simply because the interest income on the public provident fund is not taxable. In the case of tax savings bank fixed deposits the same is fully taxable.
Interest rates at the moment are higher in the case of banks, depending on which bank you place the fixed deposit under. For example, TamilNad Mercantile Bank at the moment offers you the best rate of 9.00% on their tax saving deposits, which is marginally higher then the interest rate received on the public provident fund. However, the later is a much more tax efficient investment vehicle.