7 Things You Need to Know About the SBI Tax Savings Scheme

Written by Sravan

Updated on:

In Financial planning, tax saving plays a crucial role for the individuals who wants to optimise their wealth accumulation and to those who wants to minimise their Tax liability.

Among many tax-saving options available in India, the State Bank of India (SBI) tax savings scheme emerges as a highly sought option with a unique blend of flexibility and potential returns,

In this article, we are going to discuss about the Long-term deposit scheme of SBI Tax Savings Scheme, 2006, its key features, eligibility criteria, benefits and lot more.

Let’s get started..!!

1. Eligibility

– 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.

That’s cool..!!
Let me know how much amount one can deposit into this Scheme..?

2. Deposit limits

Under SBI Tax Savings Scheme, you don’t need to make any Monthly or recurring deposits. You make deposits one time only.

The SBI customers who want to deposit their money for the Long-term period, if they have money, it might be quite useful.

The Minimum amount to deposit 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 per financial year.

How many times I can deposit money in this scheme?
SBI Customers can deposit money into this scheme any number of times till it reaches the yearly threshold of Rs.1,50,000/- rupees.

What about the Period of deposit i.e. how long I should hold my deposit?

3. Time limit

In 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 five years i.e. Lock-in-Period &
The maximum period you can hold is for 10 years.

How much and what type of Interest I can expect from this scheme..!!

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, that 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 6.50% interest rate to the General public and 7.50% to senior citizens.

What about Income tax on my deposited amount?

5. Income Tax Deduction

In this SBI FD Tax saver scheme, you can claim a deduction of the amount deposited U/s 80C of the Income Tax Act, 1961 up to Rs.1,50,000/- per year.

6. Premature Withdrawl

Under this scheme, you cannot withdraw the deposited amount Prematurely before the expiry of 5 years from the date of its receipt.

Premature withdrawal will be allowed only in case of the death of the depositor.

7. SBI FD Tax saverOther Points

– Under this scheme, you can create a Term deposit account (TD) as well as a Special Term Deposit account (STD)

– This SBI FD Tax saver may be transferred from one branch 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.

For Example,
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 the Loan or as Security to any other asset.

– This scheme also offers a Nomination facility as well

As the name itself mentioned that Tax Saving scheme, it is meant only for Long-term depositors i.e. for a Minimum of 5 years.

However, 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”

If you are looking for a short and sweet, this scheme is not for you my dear friend. Then, you can check here for latest Fixed deposit rates offered by various banks ranges from 7 days to 10 years.

SBI Tax saving scheme TDS for General citizens?

If the SBI customer is a Regular Citizen and earns more than Rs.40,000/- in the form of Interest income in a single Financial Year, then, the bank will deduct TDS @10% on your Interest earnings.

SBI Tax saver scheme for Senior citizens

If the SBI customer is a Senior Citizen and earns more than Rs.50,000/- in the form of Interest income in a single Financial Year, then, the Bank will deduct TDS @10% on your Interest earnings.

SBI Tax saver FD Interest rate

From 15th February 2023, if the period of deposit you hold is between 5 years to 10 years, then you will offer a 6.50% interest rate to the General public and 7.50% to senior citizens.

I hope you understand the “SBI Tax Savings Scheme” concept.
Please Comment “GOOD” if you like the article and it encourages us. Also, share this article with your Friends & Family…

Thanks for reading..!!!

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.

Leave a Comment