However, it is important to note only those who stick with the old tax regime can get the tax deduction on tax-saving FDs.This benefit isn’t available under the new tax regime.
Tax-saving Fixed Deposits
According to ET, a Tax-Saving Fixed Deposit (FD) account enables you to earn interest while lowering taxes. You can avail a tax deduction of up to Rs 1.5 lakh annually under Section 80C of the Income Tax Act, 1961. The funds you invest in this FD are locked in for five years, and withdrawal is not permitted during this period. It’s a beneficial choice for individuals aiming to reduce tax liabilities and secure a fixed return on their investment. However, it’s important to note that the interest earned is subject to taxation, and the interest rate differs among banks.
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Interest rates on senior citizen tax-saving FDs
Banks provide higher interest rates on FDs for senior citizens. Many banks offer an additional interest rate of up to 0.50% per annum for senior citizen investors. Let’s take a look at the interest rates offered by private and public sector banks on five-year tax-saving FDs.
Tax implications on interest earned
Income tax is imposed on the interest earned from tax-saving FDs, with TDS applied to this income. However, senior citizens can avoid or reduce TDS by submitting Form 15H to the bank. Additionally, under section 80TTB of the Income Tax Act, senior citizens can deduct up to Rs 50,000 from the interest paid on tax-saving FDs.
How to submit Form 15H in SBI for tax savings
Here’s how you can submit Form 15H in SBI to save on taxes:
- Visit www.onlinesbi.com and log in to your account.
- Under “e-services,” select the option to submit Form 15G/H.
- Choose Form 15H if you are below 60 years old.
- Select your CIF number and click on submit.
- Choose the branch code where you need to submit the form and click submit.
- Fill in your details such as name, PAN, address, etc., and click submit. After reviewing the details, click on ‘Confirm.’
- You’ll receive a one-time password (OTP) on your registered mobile number. Enter the OTP and click confirm.
Upon successful submission, a Unique Identification Number (UIN) will be generated. You can download a copy of the completed form from the links displayed on the screen.