Tax saver FD in SBI
Tax saver FD in SBI is another option of tax saving about which most of us might be unaware. Tax savings fixed deposits are the easiest tax savings vehicles under section 80C of the income tax act 1961.
The maximum amount which can be claimed as exemption u/s 80C is Rs 100000/-. A fixed deposit has a locking period of minimum 5 years which means during the locking period you neither can withdraw your investment i.e. lapse in between nor it can be pledged as a security either. The interest rates on FD are always fluctuating and can always change in a near future. At present interest rates prevailing on fixed deposits is 8.25% for normal citizens and additional 0.50% for senior citizens (people above 60 years of age and residing in India) i.e. which comes to 8.75%. This shows the concern of RBI for betterment of senior citizens.
Interest rates on tax saver FD in SBI
The interest rates on tax saving fixed deposits are generally calculated on a quarterly basis and the interest is reinvested into the fixed deposit. So, after every quarter the principal increases by an amount earned as the interest in the last quarter. If the tax saver fixed deposit calculates interest rates on a monthly basis the rate of interest offered on such fixed deposits will be considerably lower than those calculated on a quarterly basis.
If we compare tax saving FD’s to NSC, Tax saving FD’s have an edge on lock in period which is lesser by one year. If a person invest appropriately it will help in reaching to financial independence through maximum savings and least amount of tax payout by claiming maximum eligible deduction under Sec 80C of Income Tax Act 1961.