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Shivalik Small Finance Bank Tax Saving Fixed Deposit

Updated 07 Sep 2023

Shivalik Small Finance Bank introduces its tax-saving fixed deposits as an embodiment of financial prudence and effective tax strategy. For investors aiming to optimize their wealth while navigating the tax landscape efficiently, these FDs offer a promising route.

 

Shivalik, with its rich legacy and focus on fostering financial growth, ensures that its tax-saving FDs are more than just an investment; they're a trusted financial companion for those aiming for a stable and prosperous future.

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 Shivalik Small Finance 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 Shivalik Small Finance 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 the 80C benefit.

Documents required for Shivalik Small Finance Bank FD account

If you are not a prior customer or account holder in Shivalik Small Finance Bank, here are some documents you must submit.

For 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 should not be more than 3 months old)

FAQs

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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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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