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Equitas Small Finance Bank Tax Saving Fixed Deposit

Updated 07 Sep 2023

Taxation is an aspect every investor needs to grapple with, regardless of their choice of bank or financial institution. Though evading taxes entirely becomes impossible after reaching a certain threshold, there are various tax-saving instruments to help reduce overall tax liability. One of these is the tax-saving FD, which Equitas Small Finance Bank offers.

 

Unlike regular FDs, tax-saving FDs have a minimum tenure of 5 years. The principal amount invested in these FDs is tax-deductible under section 80C, but the interest earned is taxable.

Features of the Tax-saving FDs

  • Interest earned on FDs is counted as part of total income and is taxable per prevailing slab rates.
  • As per section 80C of the Income-tax Act 1961, investments in tax-saver FDs up to ₹1,50,000 are deductible.
  • Senior citizens (over 60) can claim a deduction of up to ₹50,000, while non-senior citizens can claim up to ₹40,000.
  • If PAN isn't provided, TDS is deducted at 20%.
  • If your total income is less than ₹2.5 lakhs, TDS can be avoided by providing Form 15G to the bank. Senior citizens can submit Form 15H.

Further Insights into Features

Duration: Tax-saving FDs come with a 5-year lock-in period, meaning you can't withdraw funds during this time.

Interest Offerings: Equitas Small Finance Bank offers competitive interest rates. Typically, senior citizens are given an additional rate increment.

Borrowing against FD: These FDs usually can't be mortgaged for loans due to their fixed tenure.

Interest Disbursement: Various payout options might be available, such as monthly, quarterly, or annually. Some banks also allow reinvestment of interest.

Renewal Policy: Unless specified otherwise, these FDs might be auto-renewed after maturity for the same duration at the then-prevailing rate.

Early Withdrawal Charges: Pre-mature withdrawals aren't allowed during the lock-in period. After the lock-in, withdrawing before maturity might result in penalties.

Investment Limits: Generally, there's a minimum deposit requirement for these FDs, with the maximum limit usually being ₹1.5 lakh per year, in line with 80C rules.

Tax Deduction at Source (TDS): TDS is deducted if the interest income crosses certain thresholds.

Eligibility Criteria for Opening a Tax-Saver FD with Equitas Small Finance Bank

  • Resident Individuals: Any Indian resident can open a tax-saver FD.
  • HUF: The family's Karta can open an FD.
  • Minors: Minors can, via guardians.
  • Single or Joint Accounts: Both types of accounts can be opened. Only the primary account holder usually gets the 80C benefit for joint accounts.
  • Existing Equitas Small Finance Bank Customers: Existing customers may find the online process smoother due to pre-existing KYC. New customers would need complete KYC verification.
  • Amount: Investments can begin from as low as ₹100 and go up to ₹1.5 lakhs yearly for availing 80C benefits.

Documents Required for an FD Account at Equitas Small Finance Bank

For newcomers to the bank

Identity Proof and Signature Proof

  • PAN Card
  • Driving License
  • Passport
  • Voter’s ID
  • Aadhar Card

For Address Proof

  • PAN Card
  • Driving License
  • Passport
  • Voter’s ID
  • Aadhar Card
  • Utility Bill
  • Bank account Passbook (Updated and not older than 3 months)

FAQs

What is the maximum and minimum amount I can deposit in a Tax-saving FD?

Typically, investments can start from ₹100; the maximum that can be claimed as a deduction under Section 80C is ₹1.5 lakhs annually.

Do senior citizens receive additional interest on Tax-saving FDs?

Yes, senior citizens usually get higher rates than regular deposit rates.

Is the interest from Tax-saving FDs tax-exempt?

No, only the deposited principal gets the 80C benefit. Interest is taxable.

Note: Always cross-check with the official Equitas Small Finance Bank website or a bank representative for the most updated and accurate information.

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Disclaimer: Wint Wealth makes no guarantee or warranty on the accuracy of the data provided on this site, the information displayed is subject to change and are provided on an as-is basis. Nothing contained herein is intended to or shall be deemed to be investment advice, implied or otherwise. You are advised to make your own enquiries, consult a professional advisor and verify the information prior to taking any investment decisions. We accept no liability for any loss arising from the use of information contained on this website.

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