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What is HDFC Tax Saving FD?

HDFC Tax Saving FD is a type of fixed deposit that provides the benefits of investing in an FD along with tax saving. With an investment in an HDFC Tax Saving FD, you can save income tax under section 80C of the Income Tax Act, 1961. Section 80C allows a tax deduction of Rs 1.5 lakhs for an investment in a tax saving fixed deposit. The HDFC Tax Saving FD has a lock-in period unlike other fixed deposits of 5 years. Hence, while investing in a tax saving FD an investor must consider the liquidity of this investment. 

HDFC Tax Saving FD Interest Rate 2022

Type of DepositorRate of Interest
Individuals (Less than 60 years of age)5.60%
Senior Citizens6.35%

Features of HDFC Tax Saving FD

  • The minimum amount for the tax saving FD is Rs. 100 & in multiples of Rs. 100
  • Maximum amount allowed for a financial year is Rs. 1.5 Lakhs
  • The lock-in period is 5 Years from the date of deposit
  • Due to the lock-in period, the investor cannot prematurely withdraw the HDFC Tax Saving FD
  • An investor can opt for a monthly, quarterly payout. Alternatively, an investor can opt for a payout of interest on the maturity of the fixed deposit. While depositing the amount you can select the maturity instructions. 
  • In the case of joint deposits, the tax deduction will be available only to the first FD holder of the deposit. The first HDFC Tax Saving FD holder can claim a tax benefit under section 80C of the Income Tax Act, 1961.
  • TDS on interest will be deducted after the end of every calendar quarter
  • Your interest will be calculated every three months. Every quarter, the interest for reinvestment is computed, and the Principal is increased to reflect the interest earned the previous quarter.
  • In case of loss, theft, destruction, mutilation or defacement of the FD receipt, a duplicate receipt will be issued only on furnishing an Indemnity bond in the prescribed form with one or more approved sureties or with a bank guarantee.
  • TDS will be deducted when interest payable or reinvested on RD and FD per customer across all branches exceeds Rs. 40,000/- (Rs. 50,000/- for senior citizens) in a financial year. 
  • Individuals seeking exemption from TDS on the interest income of FD and RD, have to submit a completed Form 15 G/H at the nearest branch or online within the first week of the new Financial Year and every time a new deposit is booked.
  • Maturity amount for deposits would vary to the extent of tax and compounding effect on tax for the period subsequent of deduction till maturity and also due to rounding off to the extent of 50 paise in each F.Y.

Who Can Invest in the HDFC Tax Saving FD?

Every resident in India including a senior citizen and a HUF Hindu Undivided Family can invest in the HDFC Tax Saving FD.

How To Invest in HDFC Tax Saving FD?

An investor can invest in  HDFC Tax Saving FD either through online internet banking or offline.

Online Through Internet Banking or Mobile Banking

  • Login to their internet banking or mobile banking
  • Go To ‘Account’
  • Click on ‘Transact’
  • Now select the option of ‘Open a Fixed Deposit < Rs 5 crores’.
  • Select the Type of FD as 5 years Tax Saving Fixed Deposit
  • Select the account from which the amount must be debited
  • Choose the place of FD as a home branch or others
  • Enter the FD amount
  • Select the nature of deposit as monthly interest payout, quarterly interest payout, or reinvestment of interest
  • Select the maturity instructions, interest payable, and interest payable mode
  • Choose the bank account to which the principal and interest amount must be credited on the maturity of the fixed deposit
  • Declare the nominee information 
  • Click on continue and the deposit amount will be deducted from the bank account

Offline

You can open an HDFC Tax Saving FD account by visiting the nearest branch of HDFC bank. You need to submit the FD account opening application form along with a few documents. Such documents include PAN and any other proof of address such as Aadhaar. The online mode is more convenient because you can open the FD account at your ease with a few clicks. Moreover, you need not submit any other documents since the bank already has your updated KYC.

Tax on HDFC Tax Saving FD

  • Till we have understood that the amount invested is allowed as a tax deduction under section 80C up to Rs 1.5 lakhs.
  • The interest income is taxable under the head income from other sources. The interest will be added to the total income earned in a financial year. It is taxed at the slab rate applicable to the investor for the financial year.
  • TDS Certificates will be mailed at the end of each quarter during the financial year. The TDS certificate contains the details of the amount of TDS deducted.
  • According to section 206AA, every person who gets income on which TDS is deductible must provide his or her PAN. If the depositor fails to furnish the PAN then TDS will be taken at a rate of 20% instead of the current rate. If your PAN is not updated with the Bank or is incorrect then as well bank will deduct TDS at 20%
  • TDS is deducted when the total amount of interest due or reinvested on FDs and RDs per customer across all branches exceeds Rs 40,000. This is Rs. 50,000 for senior citizens in a financial year. 
  • TDS is also recovered on interest accrued at the end of the financial year.

Lower or NIL Deduction of TDS

  • In the case of an individual resident in India, TDS will not be deducted from the taxable interest if such individual provides the Bank Form 15G / Form 15H as applicable. This declaration states that the tax on the estimated total income for the financial year will be Nil. However, the individual must provide his or her PAN to HDFC bank.
  • Investors must send Form 15G or Form 15H to the bank in triplicate. One copy will be submitted to the IT department. The second copy will be deposited in the bank’s records. The third will be available to the customer with a Branch seal as an acknowledgement. 
  • Every new Financial Year the investor must submit 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 the day after the interest payout/credit immediately preceding the date of form 15G/H filing.
  • For tax exemption, Form 15G/H must be presented for each fixed deposit with the bank.
  • The bank will not be held liable for any consequences resulting from the failure to submit Form 15G/H on time or at all.

Frequently Asked Questions

Can I open a joint tax saving FD with HDFC Bank?

Yes, you can open a joint tax saving FD just like any other fixed deposit. However, for the tax-saving FD, the first holder can claim tax benefit under section 80C.

How much tax can I save with a tax-saving FD at HDFC?

The amount of tax you can save will depend on the tax bracket you are in and the sum you invest in the FD. If you are in the highest tax bracket (of 30%) and put Rs 1.5 lakh in the tax saving FD, you can save up to Rs 46,350 (Rs 45,000 in tax, plus Rs 1,350 in cess).

How much may I put into an HDFC five year tax savings fixed deposit?

In a financial year, you can invest between Rs 100 (minimum amount) and Rs 1.5 lakh in an HDFC tax saving FD.

What is the duration of HDFC Tax Saving FD?

HDFC Tax Saving FD has a lock-in period of 5 years. These FDs, unlike conventional FDs, cannot be withdrawn early.

How is interest on HDFC Tax Saving FD calculated? What is the frequency of interest payout?

The interest will be calculated every month or every three months. Interest is determined on a quarterly basis for reinvestments. In addition, the principal amount is increased (for reinvestments) to account for the interest you earned the previous quarter. TDS is deducted in accordance with income tax laws.

How will I receive my TDS certificate?

The TDS certificate will be issued to you through your registered email address with HDFC bank. Alternatively, you can view the TDS credit with Form 26AS if you have not received the TDS certificate from the bank.

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