Cosmos Bank Tax Saving Fixed Deposit
Updated on: Sep 7th, 2023
Tax-saving fixed deposits (FDs) is a prominent instrument for those looking to blend the safety of traditional savings with the benefits of tax deductions. Cosmos Co-operative Bank, with its rich history and extensive reach in Western India, offers a Tax Saver Deposit Scheme that not only provides investors with a secure and reliable interest return but also allows them to avail of a tax deduction of up to ₹1.5 lakhs under Section 80C of the Income Tax Act of 1961.
Investing in Cosmos Bank's tax-saving FD means balancing garnering good returns and effectively reducing your taxable income.
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: While there's a minimum deposit requirement to start a tax-saving FD, 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 Cosmos Co-operative 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 Cosmos Co-operative 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 typically starts from a small amount (e.g., ₹100) but can go up to a maximum of ₹1.5 lakhs in a financial year to avail of the 80C benefit.
Documents required for Cosmos Co-operative Bank FD account
If you are not a prior customer or account holder in Cosmos Co-operative 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 ₹100. 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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