Invest in Tax Saving Deposit with Banks

With the Tax season on the salaried class is looking for avenues to save tax. The banks have Tax Saving Deposits which help them in saving the tax. The Amount invested in such deposit gets Tax Benefit under Section 80CCC of Income Tax subject to overall limit of Rs.1 lakh. You can opt for Interest payment at periodical interval or opt for cumulative interest to be paid at the time of maturity. Such deposit will have fixed maturity of 5 years. You cannot withdraw it prematurely and you cannot avail any loan by pledging the deposit. The interest earned is taxable. 

Tax implications of various Bank Deposit products

The tax season is on. You must have invested in various bank deposits. What is the tax implicaitons of various bank deposit products ?

In Banks you will normally have Savings Bank Account, Current Account, Sweep Account, Recurring Account, Fixed Deposits, Cumulative Deposits. Let us know the tax implications one by one.

Savings Bank Account: Banks do not deduct any tax on the interest earned by you on your Savings Bank account balance. But the interest earned is Taxable. Its your responsibility to add it to your total income and pay tax accordingly. But the good thing is that if you are individual or HUF you can get tax exemption of Rs.10000 under Section 80 TTA on your interest earned on SB deposits.