SBI TAX SAVINGS SCHEME, 2006, is a special type of fixed deposit, offered by SBI, which lets you claim tax deduction under the Section 80C of the Income Tax Act, 1961. Although, SBITSS can be opened both as a TDR and a STDR, certain restrictions on the deposits held under SBITSS make it distinct from normal fixed deposits. (click here, to know more about TDRs and STDRs.)
Like every tax-saving instrument, the deposits held under SBITSS has a lock-in period before which it can not be encashed. In case of SBITSS, the lock-in period is 5 years. Therefore, the minimum tenure of SBITSS deposit is 5 years. The maximum tenure of SBITSS deposit is similar to the maximum tenure of normal fixed deposits i.e 10 years. In line with the maximum deduction allowed under the section 80C of IT Act, the maximum deposit in SBITSS scheme is limited to Rs. One Lac in a financial year. Another restriction over the SBITSS deposit is that, no loans can be availed against the deposits held under the scheme.
The rate of interest offered under SBITSS is similar to that offered on the normal fixed deposits of similar amount and tenure. Like normal fixed deposits, Senior Citizens (above the age of 60) are offered an additional interest rate of 0.50 %.
Although the investments made under the SBITSS help you in lowering your tax burden at the time of investment, the interest accrued/earned on the deposit is taxable in the hands of the depositor. At the current interest rate of 9.75 % and 9.25 %, for Senior Citizens and non-Senior Citizens respectively, the SBITSS is certainly better than all those schemes, e.g NSCs and SCSS, whose returns are taxable. ( The current interest rate offered on NSCs (National Savings Certificate) of duration 5 years and 10 years, are 8.4 % and 8.7 % respectively. The interest rate on SCSS (Senior Citizens Saving Scheme) is 9 %).
However, no such clear cut conclusion is possible if SBITSS is compared with the schemes which provide tax-exempt returns, e.g PPF. The attractiveness of the scheme will depend on the tax bracket of the depositor. The higher the tax bracket, the less attractive will SBITSS be.
Its Good knowledge about claim tax deduction.Its mandatory to know these type of information which is very help full.Thank you so much
ReplyDeleteThis blog contain good information about what are the Tax Saving Schemes of SBI and how person can claim tax deduction under Section 80c. This is very helpful who are looking the best tax saving methods. Thanks for sharing.
ReplyDeleteThat sounds great! I think tax saving scheme has been attracting more and more people to invest their money. Even I am creating strong investment portfolio. I will be considering such investments for my future. Right now, need some info about Capital gain Bonds and mutual funds.
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