Tax Saving Schemes: How to Open FD SBI Tax Saving Program Online to Save Tax

Banks offer fixed rate fixed deposits with a term of 5 years that investors can use to save tax. One such bank is the State Bank of India (SBI). Any resident Indian who has a Permanent Account Number (PAN) or who is a Karta of a Hindu undivided family can opt for SBI Tax Saving FDs to save tax.

SBI in its last tweet said, “Grow your savings with SBI Tax Savings Term Deposits.”

SBI Tax Savings Plan

In an SBI Tax Savings Scheme, Fixed Deposit Scheme 2006, the minimum deposit is Rs 1,000 or multiples thereof, with a maximum deposit of Rs 150,000 per annum. The minimum investment period is 5 years and maximum 10 years. General investors will get an interest rate of 5.5% on SBI FD maturing between 5 and 10 years and seniors will earn 6.3%.

Tax Savings Program via Internet Banking

If you are a user of SBI net banking, you can invest in fixed tax savings easily in minutes.

Step 1: Login to SBI net banking using credentials

Step 2: Under the ‘Fixed deposit’ tab, click on ‘e-TDR/ eSTDR FD’

Step 3: Click on e-TDR/ eSTDR under Tax Savings Plan

Step 4: Click Continue

Step 5: Select the account, amount and agree to the Terms and Conditions and click Submit.

Step 6: Click “Confirm” on this page. On the next page you will find all the details of your SBI Tax Savings Fd.

Taxation

The investment amount up to Rs 1.5 lakh in a financial year is eligible for deduction under Section 80C of the Income Tax Act. However, it should be remembered that interest paid/accrued on principal is fully taxable in your hands. Interest will be added to your income and taxed at the tax rates applicable to your income bracket.

If interest payments on FDs with a single bank exceed Rs 10,000 in a financial year, then the TDS will be deducted by the bank. To avoid TDS, one can submit Form 15G or Form 15H, as applicable.

The TDS is charged at the standard rate. The FD investor must submit Form 15G/15H to obtain exemption from tax deduction under income tax rules.

Ease of withdrawal and loan on FD taxation

Except in the event of the death of the depositor, no deposit may be cashed before the expiry of a period of 5 years from the date of the deposit. The loan facility is not available during the five-year lock-up period.

Death of the FD investor

In the event of the account holder’s death, the deposit may be withdrawn at any time before or after the due date by the legal successors/heirs. If the first holder of a joint account dies, the other account holder has the right to withdraw the deposit before it matures. The Bank will pay interest at the prevailing rate for the duration of the deposit, without penalty.

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