Bank schemes better than PPF, NSC - 5 Yrs Fixed Deposit Rates Increased for Tax Planning Section 80C
Tax savings deposit schemes offered by most commercial banks still have a tiny edge over instruments like National Savings Certificate (NSC) or Public Provident Fund (PPF), in terms of interest rates.
These banks are likely to keep their interest rates unchanged at least for the next 15 days, the period when income tax payers typically rush to invest in tax benefit schemes under Section 80C of Income-Tax Act, 1961.
A majority of banks are offering a slightly higher interest rate on five-year tax savings deposits compared with the 8% rate on NSC or PPF, despite the across-the-board cut in bank interest rates over the last few months.
In fact, top bankers often say that the 8% rate acts as a benchmark and banks don't want to breach it in order to hold on to the edge they have been enjoying over postal deposits.
At present, State Bank of India, Allahabad Bank, Bank of Baroda and Central Bank of India are offering an 8.5% rate per annum on their five year tax benefit scheme. Bank of India, Canara Bank and Uco Bank offer 8.25% a year while Indian Bank, Union Bank of India are at par with postal tax deposit schemes.
Three banks - Indian Overseas Bank (IOB), Oriental Bank of Commerce and United Bank of India - have special offers for tax savers at 9% rate a year. Their normal five-year deposits, however , attract less than this. IOB offers this special rate for deposits over Rs 10,000.
Among private banks, ICICI Bank pays 8.25% while Axis Bank and HDFC Bank have an 8% rate in offer. However, Punjab National Bank and Syndicate Bank have reduced the rates to 7.75% a year to protect their margin.
Investments under five-year deposits are eligible for deduction from income up to a ceiling of Rs 1 lakh in a financial year. Deposits under tax benefit scheme can not be pledged for loans and withdrawn before the five year of lock in period.
Source: ET
These banks are likely to keep their interest rates unchanged at least for the next 15 days, the period when income tax payers typically rush to invest in tax benefit schemes under Section 80C of Income-Tax Act, 1961.
A majority of banks are offering a slightly higher interest rate on five-year tax savings deposits compared with the 8% rate on NSC or PPF, despite the across-the-board cut in bank interest rates over the last few months.
In fact, top bankers often say that the 8% rate acts as a benchmark and banks don't want to breach it in order to hold on to the edge they have been enjoying over postal deposits.
At present, State Bank of India, Allahabad Bank, Bank of Baroda and Central Bank of India are offering an 8.5% rate per annum on their five year tax benefit scheme. Bank of India, Canara Bank and Uco Bank offer 8.25% a year while Indian Bank, Union Bank of India are at par with postal tax deposit schemes.
Three banks - Indian Overseas Bank (IOB), Oriental Bank of Commerce and United Bank of India - have special offers for tax savers at 9% rate a year. Their normal five-year deposits, however , attract less than this. IOB offers this special rate for deposits over Rs 10,000.
Among private banks, ICICI Bank pays 8.25% while Axis Bank and HDFC Bank have an 8% rate in offer. However, Punjab National Bank and Syndicate Bank have reduced the rates to 7.75% a year to protect their margin.
Investments under five-year deposits are eligible for deduction from income up to a ceiling of Rs 1 lakh in a financial year. Deposits under tax benefit scheme can not be pledged for loans and withdrawn before the five year of lock in period.
Source: ET
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