#FinancialBytes: SBI Tax Savings Scheme- Interest rate, tenure and more
What's the story
The State Bank of India, India's largest lender, offers many short-term and long-term saving schemes to its customers.
One of its popular schemes is the SBI Tax Savings Scheme, 2006.
Resident Indians as individuals or as the head of a Hindu Undivided Family (HUF) are eligible to apply for it.
From interest rate to tenure, here are six things you should know about it.
Points 1,2
Rules about minimum/maximum amounts and rate of interest
Amount: An applicant needs to deposit a minimum amount of Rs. 1,000, or in multiples thereof. However, the maximum deposit must not exceed Rs. 1,50,000 in a year.
ROI: The rate of interest, under this scheme is the same as fixed/term deposits. The prevailing interest rate is 6.25% (for general depositors), and 6.75% (for senior citizens), for retail deposits below Rs. 2 crore.
Points 3,4.5
Rules about scheme tenure, premature withdrawal, and loan facility
Scheme tenure: The minimum tenure for the SBI Tax Savings scheme is 5 years. However, it can go up to as much as 10 years.
Premature withdrawal: Investors are not allowed to withdraw the deposit before the completion of five years, starting from the date of receipt.
Loan facility: Customers cannot use the term deposit account to secure any loans.
Point 6
Rule about tax savings on the scheme
As the name suggests, the scheme aims at helping customers lower their tax burden.
Under the scheme, one can avail tax benefits of up to Rs. 1.5 lakh in a year, under Section 80C of Income Tax Act 1961.
Furthermore, nomination facility is also available under the said scheme.
If you wish to start the term deposit account, contact your nearest SBI branch.