Last Updated: March 19, 2024, 11:34 IST
Taxpayers must be effectively-knowledgeable and proactive in leveraging these tax-saving alternatives to their benefit. (Representative picture)
While tax-saving FDs are an alluring various, Post Office Term Deposits are one other funding automobile that attracts in traders
Tax-saving fastened deposits are the popular selection for most individuals searching for to decrease their taxable earnings for the reason that rewards are assured and glued.
While tax-saving FDs are an alluring various, Post Office Term Deposits are one other funding automobile that attracts in traders. Every quarter, the federal government updates rates of interest for small financial savings schemes.
However, the charges on all 10 small financial savings plans—together with the 5-12 months Post Office Time Deposit (POTD)—have remained unchanged for the April–June 2024 quarter. When it involves their 5-12 months fastened deposits, a number of banks additionally supply tax advantages.
Here’s a comparability of main banks’ tax-saving fastened deposits and 5-12 months POTD:
Tax Saving Fixed Deposits:
A tax-saving fastened deposit (FD) account is a type of FD that lets you save taxes beneath Section 80C of the Income Tax Act of 1961.
Investing on this account entitles you to a most deduction of Rs 1.5 lakh per 12 months. It has a 5-12 months lock-in interval and the curiosity acquired is taxed at charges starting from 5.5% to 7.75%.
The lock-in interval prevents you from withdrawing prematurely. Banks present completely different rates of interest on tax-saving fastened deposits. State Bank of India (SBI) offers an rate of interest of 6.50% to all residents. For tax-saving FDs, HDFC Bank and ICICI Bank present rates of interest of seven%. DCB Bank offers a 7.75% rate of interest on tax-saving FDs, whereas IndusInd Bank affords 7.25%.
Post Office Time Deposit (POTD):
Investing in a 5-12 months Post Office Time Deposit (POTD) additionally offers a tax profit beneath Section 80C of the Income Tax Act, 1961. Investing in a 5-12 months POTD entitles you to a tax deduction of as much as Rs 1.5 lakh.
These fastened deposits might be for one, two, three, or 5 years, enabling you to decide on the time period that finest meets your monetary targets.
You can withdraw a few of your funds earlier than the fastened deposit matures, however solely after six months from the day you deposited it.
The rate of interest on POTD for the April–June 2024 quarter is 7.5%. The minimal quantity that may be invested is Rs 1,000 and you might make investments in multiples of Rs 100.
