How to open SBI tax-saving FD scheme online to save tax

Banks offer tax-saving fixed deposits with a 5-year tenure which investors can use to save tax. One such bank is the State Bank of India (SBI). Any resident Indian who has a Permanent Account Number (PAN) or who is a Karta of a Hindu undivided family can opt for SBI tax saving FDs to save tax.

SBI in its latest tweet stated: “Grow your savings with SBI Tax Saving Term Deposits.”



SBI Tax Savings Scheme
In an SBI Tax Savings Scheme, 2006 fixed deposit plan, the minimum deposit is Rs 1,000 or multiples thereof, with a maximum deposit of Rs 150,000 per year. The minimum investment tenor is 5 years and maximum is 10 years. General investors will get an interest rate of 5.5 percent on SBI FDs maturing between 5 and 10 years and senior citizens will earn 6.3%.

Tax Saving Scheme through Internet banking
If you are SBI net banking user, you can invest in tax savings fixed easily within minutes.
Step 1: Login SBI net banking using credentials
Step 2: Under ‘Fixed deposit’ tab click on ‘e-TDR/ eSTDR FD’
Step 3: Click on e-TDR/ eSTDR under Income Tax Saving Scheme
Step 4: Click on Proceed
Step 5: Select the account, amount and accept the Terms and conditions and click on Submit.
Step 6: Click ‘Confirm’ on this page. Next page, you will find all the details of your SBI tax saving Fd.

Taxation
Investment amount up to Rs 1.5 lakh in a financial year qualifies for deduction under section 80C of the Income Tax Act. However, one must remember that interest paid/accrued on the principal is fully taxable in your hands. Interest will be added to your income and taxed at the income tax rates applicable to your income slab.
If interest payments on FDs with a single bank exceed Rs 10,000 in a financial year, then TDS will be deducted by the bank. To avoid TDS, one can submit Form15G or Form 15H, as applicable.
TDS is levied at the standard rate. The FD investor should submit Form 15G/15H to obtain an exemption from tax deduction under Income Tax Rules.

Withdrawal and loan facility on tax-saving FD
Except in the case of the depositor's death, no deposit shall be encashed before the expiration of 5 years from the date of deposit. The loan facility is not available during the five-year lock-in period.

Death of FD investor
In the event of the account holder's death, the deposit can be withdrawn at any time before or after maturity by the nominee/legal heirs. If the first account holder in a joint account dies, the other account holder has the right to withdraw the deposit before it matures. The Bank will pay interest at the current rate for the duration of the deposit, with no penalty.