ICICI Bank account holder? Earn 7.25% interest on 5 year tax-saving fixed deposit - Check income tax benefits too
Fixed deposit comes as a most secured and guaranteed form of investment by banks. It involves almost no risk, and gives in fixed interest rate at a specified period of time.
Major banks like SBI, HDFC Bank and ICICI Bank have been motivating their customers to opt for savings scheme which helps in reducing taxes. Among most popular and traditional saving scheme would be fixed deposits, which has been preferred by citizens especially senior ones for decades. Fixed deposit comes as a most secured and guaranteed form of investment by banks. It involves almost no risk, and gives in fixed interest rate at a specified period of time. Promoting FDs, private lender ICICI Bank is offering 5 year tax saving fixed deposits, which will not only is an avenue but also helps a customer save taxes.
The bank told via its twitter account, “#ICICIBank’s #TaxSaverFixedDeposit is not just an investment avenue but also helps you #SaveTheTax.”
— ICICI Bank (@ICICIBank) February 26, 2019
At ICICI, this tax saving FD not only pays interest on monthly/quarterly basis, but also acts as a convenience or a Reinvestment Plan that pays interest compounded quarterly and reinvested with the principal amount.
At minimum Rs 10,000 one can open this FD scheme, with maximum limit of Rs 1.5 lakh for a duration of 5 years.
Nominate a single nominee to your account proceeds, whether held solely or jointly. Applicants are required to fill a form prescribed under the Banking Companies (Nomination Rules), 1985.
A customer can earn up to Rs 7.25% interest rate on this scheme, while a senior citizen enjoys 7.75% on their deposit.
For example - If you decide to open this FD with a deposit amount of Rs 1.5 lakh for 5 years, you will earn Rs 64,839 at 7.25% rate on maturity. This value is for cumulative return, and if you select for monthly and quarterly the gains will be lower. Simply put, take your gains on maturity date.
In case, similar investment is made by a senior citizen, then at 7.75% rate he or she will earn interest aggregating to Rs 70,176 from ICICI.
One needs to note that, tax deducted at source (TDS) will be applicable on the interest earned. Interestingly, in interim budget 2019, the government have proposed to increase the limit of TDS to Rs 40,000 from previous Rs 10,000.
Hence, if your gains are up to Rs 64,000, deducting Rs 40,000 one will have to pay taxes only on remaining amount. Notably, at Income Tax department, you can claim your TDS and avail refund.
Apart from this, a customer can claim tax benefit of Rs 1.50 lakh under section 80C of Income Tax Act. Hence, you will not have to almost no taxes. Make note, the maximum aggregate amount that can be invested in the Tax Saver FD (80C FD) under a single PAN is Rs 150,000 and the same cannot be closed prematurely before expiry of the lock-in period of 5 years.
As interest rates are subject to change without prior notice, depositor shall ascertain the rates on the value date of FD.