Abhyudaya Bank Tax Saving Fixed Deposit
Updated on: Oct 4th, 2023
Fixed Deposits (FDs) are a popular investment avenue in India, offering safety, predictable returns, and ease of investment. Abhyudaya Co-operative Bank, with its deep-rooted history of prosperity through cooperation, stands out for its tax-saving FDs. Not only do these FDs offer attractive interest rates, but they also provide significant tax advantages.
Under the Abhyudaya Tax Saving Scheme (ATSS), depositors can claim deductions up to ₹1.5 lakhs under Section 80C of the Income Tax Act of 1961, making it a compelling option for individuals looking to optimise their taxable income. Dive into the specifics of these tax-saving FDs by Abhyudaya Bank to explore their full potential.
Features of the Tax-saving FDs
- The interest earned on all types of FDs is included in the total income and is taxable per the prevailing slab rate.
- As per section 80C of the Income-tax Act 1961, the investor gets an exemption of ₹1,50,000 in tax saver FD investment.
- For a senior citizen (Aged above 60 years), a deduction of up to ₹50,000 is available; for non-senior citizens, up to ₹40,000.
- If the PAN is not provided, then, in that case, 20% TDS is levied.
- In case your total income is below the taxable limit, i.e. Rs. 2.5 lakhs, you can avoid TDS by submitting Form 15G to the bank.
- For senior citizens, if your total income is below the taxable limit, you can avoid TDS by submitting Form 15H to the bank.
Now let’s take a look at the features a little bit in-depth:
Duration: Tax Saving FDs usually come with a 5-year lock-in period, prohibiting any withdrawals during this time.
Interest Offerings: Competitive interest rates are a highlight, and institutions like Federal Bank often provide an additional rate increment for senior citizens.
Borrowing against FD: Given their fixed tenure, these FDs typically can't be used as loan collateral.
Interest Disbursement: Different payout options, such as monthly, quarterly, or annual intervals, might be available. Some banks also provide reinvestment of the earned interest.
Renewal Policy: Unless instructed otherwise, these FDs can be automatically renewed upon maturity for an equivalent period at the current interest rate.
Early Withdrawal Charges: Withdrawals before the end of the lock-in period aren't permissible. Withdrawing after the lock-in but before FD maturity might invite penalties.
Investment Limits: There is a minimum deposit value of ₹5,000; the upper limit typically remains INR 1.5 lakh annually, aligning with the 80C guidelines.
Tax Deduction at Source (TDS): TDS might be deducted if the interest income surpasses a specified limit.
Eligibility Criteria for Opening a Tax-Saver FD
- Resident Individuals: Any individual who is a resident of India can open a Tax-saving FD with Abhyudaya Bank.
- Hindu Undivided Families (HUF): The Karta of the HUF can open a Tax-saving FD on behalf of the family.
- Minors: Minors can open an FD through a guardian.
- Single or Joint Accounts: Both single and joint accounts can be opened. However, the tax benefit under section 80C is usually available only to the first account holder for joint accounts.
- Existing Abhyudaya Bank Customers: Existing customers may find it easier to open a Tax-saving FD, especially online, given that their KYC details are already available with the bank. New customers might need to go through the full KYC process.
- Amount: The minimum amount for investment starts from ₹5,000 but can go up to a maximum of ₹1.5 lakhs in a financial year to avail of the 80C benefit.
Documents required for Abhyudaya Bank FD account
If you are not a prior customer or account holder in Abhyudaya Bank, here are some documents you must submit.
For Identity Proof and Signature Proof
- PAN Card
- Driving License
- Voter’s ID
- Aadhar Card
For Address proof
- PAN Card
- Driving License
- Voter’s ID
- Aadhar Card
- Utility Bill
- Bank account Passbook (Updated and should not be more than 3 months old)
What is the maximum and minimum amount I can deposit in a Tax-saving FD?
Typically, you can start with a minimum amount, such as ₹5,000. The maximum amount that qualifies for a deduction under Section 80C is ₹1.5 lakhs in a financial year.
Do senior citizens get an extra interest rate on Tax-saving FDs?
Senior citizens are generally offered a higher interest rate than regular deposit rates.
Is the interest earned on Tax-saving FDs tax-free?
No, the interest earned on Tax-saving FDs is taxable. Only the principal amount you deposit is eligible for a tax deduction under Section 80C.
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