HDFC Tax Saving FD

The HDFC Tax Saving FD is a form of the fixed deposit that combines the advantages of investing in an FD with tax savings. You can save income tax by investing in an HDFC Tax Saving FD under Section 80C.

Section 80C allows for a Rs 1.5 lakh tax deduction for an investment in a tax-saving fixed deposit. Unlike other fixed deposits, the HDFC Tax Saving FD has a 5-year lock-in term. As a result, when investing in a tax-free FD, an investor must evaluate the liquidity of the investment.

Characteristics of the Tax Saving FD HDFC

  • The minimum amount for a tax-saving FD is Rs. 100, and multiples of Rs. One hundred are permitted.
  • The maximum sum permitted for a fiscal year is Rs. 1.5 Lakhs.
  • The lock-in term is five years from the deposit date.
  • In the case of joint deposits - the tax deduction will be provided only to the deposit's first FD holder. Section 80C lets the first HDFC Tax Saving FD holder to receive a tax benefit.
  • TDS on interest will be deducted at the conclusion of each fiscal quarter.
  • Every three months, your interest will be calculated. The interest for reinvestment is calculated each quarter, and the Principal is adjusted to reflect the interest earned the previous quarter.
  • In the event of the FD receipt being lost, stolen, destroyed, mutilated, or defaced, a duplicate receipt will be provided only upon the presentation of an Indemnity bond in the required form with one or more approved sureties or a bank guarantee.
  • The investor cannot withdraw the HDFC Tax Saving FD early due to the lock-in period.
  • An investor can choose between monthly and quarterly payments. Alternatively, an investor might choose to receive interest when the fixed deposit matures. You can provide the maturity instructions when you deposit the funds.
  • TDS will be taken when the interest due or reinvested on RD and FD per customer across all branches reaches Rs. 40,000/- in a fiscal year (Rs. 50,000/- for senior citizens).
  • Individuals wishing to be excluded from TDS on FD and RD interest income must submit a completed Form 15 G/H to the nearest branch or online within the first week of the new fiscal year, and each time a new deposit is booked.
  • The maturity amount for deposits would vary due to tax and compounding effect on tax for the period following deduction to maturity, as well as rounding off to the extent of 50 paise in each fiscal year.

HDFC Tax Saving FD Interest Rate

 

Depositor

HDFC Tax Saving FD Rates

General Citizens

5.60%

Senior Citizens

6.35%

 

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Taxes Over the HDFC Tax Saving FD

  • The amount invested is tax deductible under section 80C up to Rs 1.5 lakhs.
  • Interest income is taxed under the category of income from varied sources. The interest earned will be added to the overall income earned throughout the fiscal year. It is taxed at the investor's appropriate slab rate for the fiscal year.
  • During the fiscal year, TDS Certificates will be mailed at the conclusion of each quarter. The TDS certificate specifies the amount of TDS deducted.
  • Section 206AA requires everyone who receives income from which TDS is deducted to give their PAN. If the depositor fails to provide the PAN, TDS would be deducted at a rate of 20% rather than the existing rate. If your PAN is not updated with the bank or is wrong, the bank will deduct TDS at a rate of 20%.
  • When the total amount of interest due or reinvested on FDs and RDs per client across all branches reaches Rs 40,000, TDS is deducted. In a fiscal year, this is Rs. 50,000 for senior citizens.
  • TDS is also recovered on accrued interest at the conclusion of the fiscal year.

Eligibility for the HDFC Tax Saving FD

Every Indian resident, including senior citizens and HUF Hindu Undivided Families, is eligible to invest in the HDFC Tax Saving FD.

Deductions of TDS

  • TDS will not be deducted from a taxable interest in the case of an individual based in India who produces the Bank Form 15G / Form 15H as applicable. The tax on the expected total revenue for the fiscal year will be Nil, according to this declaration. However, the individual must supply HDFC bank with his or her PAN.
  • Investors must submit Form 15G or Form 15H in triplicate to the bank. The IT department will receive one copy. The second copy will be kept on file at the bank. As an acknowledgment, the third will be made accessible to the purchaser with a Branch seal.
  • Each Fiscal Year, the investor must file a new Form 15G or Form 15H. If form 15G or Form 15H is submitted after the interest payout/credit, the waiver will take effect on the day following the interest payout/credit immediately preceding the date of form 15G/H filing.
  • For each fixed deposit with the bank, Form 15G/H must be supplied for tax exemption.
  • The bank would not be held liable for any consequences that arise as a result of failing to submit Form 15G/H on time or at all.

FAQs

Q1. What is the HDFC tax saving FD interest rate?

The current rate of interest is 5.60% - 6.35%.

Q2. What factors will influence the amount of tax I can save with this scheme?

It is entirely dependent on your tax bracket and the amount you have invested in the scheme. The more you invest in this FD plan, the more tax savings you will receive.

Q3. What is the formula for calculating my interest, and what is the frequency?

The interest rate will be determined monthly or quarterly. The interest on reinvestments is calculated quarterly. In addition, the principal amount is increased (for reinvestment) to incorporate the interest generated in the preceding quarter. TDS is deducted in accordance with income tax legislation.

Q4. When does TDS get deducted?

TDS is deducted whenever a bank pays or reinvests interest in a given fiscal year. Furthermore, TDS is deducted from the accumulated interest that has yet to be paid at the conclusion of a fiscal year.

Q5. How do I obtain TDS exemptions?

  • TDS paid in the prior year is not refundable. You can, however, use the TDS certificate, which contains all of the deduction details, when filing your tax return.
  • If your total interest earned falls outside of the tax rate, you must provide the 15G/15H forms.
  • The 15H/15AA forms are only valid for the year in which they were issued.
  • Form 15G/H must be submitted for existing deposits within the first week of the fiscal year.

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