South Indian Bank Tax Saving Fixed Deposit
Updated 30 Aug 2023
Fixed Deposits (FDs) are a choice for many regarding safe and reliable investment options. However, life can be unpredictable, and there might come a time when you need to access those funds earlier than planned. South Indian Bank, known for its customer-centric approach, offers provisions for such situations.
If you're considering breaking your FD with South Indian Bank, this guide is tailor-made. We'll provide a step-by-step procedure breakdown, highlighting any penalties or implications involved. Let's delve into the nuances of premature FD closure with South Indian Bank.
Features of Tax-Saving FDs
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 and Documents Required
- Both individuals and Hindu Undivided Families (HUFs) are qualified to invest in these tax-saving FD schemes.
- For the purpose of tax savings, one can opt for fixed deposits in either public or private sector banks. However, cooperative and rural banks don't qualify.
- A 5-year term deposit in a post office is also recognized as a tax-saving instrument.
- Deposits can be made individually or as a joint account. However, only the first account holder is entitled to the associated tax advantages.
Regarding the documents required-
- Aadhar Card
- Drivers License
- Gas Bills
- Utility Bills
- Bank Statement
- Or a Cancelled Bank Cheque
What is the main purpose of SIB Bank's Tax-Saving FD?
It is a tax-saving instrument where investments are eligible for deductions under Section 80C of the Income Tax Act.
What is the lock-in period for these FDs?
The lock-in period for tax-saving FDs is typically 5 years.
Can I withdraw my FD before the lock-in period ends?
No, premature withdrawals are not allowed during the lock-in period.
What is the interest rate offered on these FDs?
The interest rates vary, and SIB Bank might offer differential rates for general customers and senior citizens. Always check the latest rates on their official website.
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