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SBM Bank Tax Saving Fixed Deposit

Updated 31 Aug 2023

In the vast financial universe, finding effective tools for tax mitigation while securing sound returns is crucial. SBM Bank emerges as a trusted partner in this journey, offering its Tax-Saving Fixed Deposits to strike the perfect balance. These FDs promise competitive interest rates and provide tax deductions under Section 80C of the Income Tax Act.

 

Through this blog, we'll unravel the facets of SBM Bank's tax-saving FDs, assisting you in navigating the terrain of intelligent investing and tax benefits. Join us as we demystify the synergy between savings and tax optimisation at SBM 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-  

Identity Proofs

  • Aadhar Card 
  • Passport
  • Drivers License

Address proofs

  • Gas Bills
  • Utility Bills
  • Bank Statement 
  • Or a Cancelled Bank Cheque

FAQs

What is the main purpose of SBM 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 SBM Bank might offer differential rates for general customers and senior citizens. Always check the latest rates on their official website.

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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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