In this article, we are going to discuss a Long term deposit scheme from India’s largest public sectored State Bank of India i.e. SBI Tax Savings Scheme 2006.
This SBI tax saver Saings scheme comes with 2 advantages
1. You can Deposit even a small amount in this scheme.
2. You can Claim an Income tax deduction of your deposited amount.
This Fixed deposit scheme will be called a “Tax saver FD SBI”
Let’s discuss the features and other benefits like the Minimum and Maximum amount to be deposited, Interest rates offered by SBI, and a lot more.
- Indian citizens who have PAN are eligible for this SBI Tax Savings Scheme 2006. i.e. Resident Indians for himself/ herself as an individual or in the capacity of the Karta of Hindu Undivided Family (HUF) having PAN.
2. Deposit limits
In this scheme, you don’t need to make any Monthly or recurring deposits. The SBI customers who want to deposit their money for the Long term whenever they have money, for them it is quite useful.
The Minimum deposit to make in this SBI Tax Savings Scheme is Rs.1,000/- rupees only and the Maximum amount one can deposit is up to Rs.1,50,000/- rupees for one financial year.
You can deposit money into this scheme any number of times till it reaches the yearly threshold of Rs.1,50,000/- rupees.
3. Time limit
In this SBI Tax savings scheme, the deposited amount must be held for a minimum period of 5 years. It means you cannot withdraw your deposited amount within a period of five years i.e. Lock-in-Period &
the Maximum period you can hold is for a period of 10 years.
SBI won’t provide any Loans or Advances against these deposits during Lock in period.
4. Interest type
In this tax saver fixed deposit sbi, the Interest Rate will be applicable as applicable to Term Deposits. But the advantage is, you will be paid a Quarterly interest on your deposited amount on a Compounding basis.
The Interest rates applicable for the SBI Tax Saver fd interest rate are as follows:
From 15th February 2023, if the period of deposit you hold is between 5 years to 10 years, then you will offer a 6.5% interest rate to the general public and 7.5% to senior citizens.
5. Income Tax Deduction
In this scheme, you can claim a deduction of the amount deposited U/s 80C of the Income Tax Act, 1961.
6. Premature Withdrawl
Under this scheme, you cannot withdraw the deposited amount Prematurely before the expiry of five (5) years from the date of its receipt. Premature withdrawal will be allowed only in case of the death of the depositor.
7. Other Points
- Under this scheme, either you can create a Term deposit account (TD) as well as a Special Term Deposit account (STD)
- The deposit may be transferred from one branch, from which it has been issued, to another branch. For that, the depositor has to make an Application, at either of the two branches.
- Whereas, the Term Deposit cannot not be transferred to another Bank.
Eg: You cannot transfer a Term deposit from SBI to HDFC bank but you can transfer a Term deposit from SBI Branch 1 to SBI Branch 2
- The Term Deposit shall not be pledged to secure Loan or as Security to any other asset.
- This scheme also offers a Nomination facility as well
I hope you understood the “SBI Tax Savings Scheme” concept.
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Author is a Qualified CMA with rich industry experience for more than 6 years. He is an All India Ranker (AIR-101) in CMA and also a Semi-Qualified Chartered Accountant having a quite good experience in teaching the subjects of Accounting and Costing to the commerce aspirants.