ICICI Tax Saving FD

When investing money comes to mind, the safest and most traditional way we know of is Fixed Deposits. Everyone has heard about it and invested in Fixed Deposits at some point in our life. With the increasing inflation and change in investment options, Fixed Deposits stand still. But taxes take a big chunk of our profits, and one should know ways to save taxes to gain more profit. Tax Saving investments like ICICI Tax Saving FD are what you should look for. There are various benefits and key features which might become useful for saving taxes and earning more profit. 

This article is here to provide you with information regarding  Tax Saving FD by ICICI and its key benefits. 

What is Tax Saving Fixed Deposit?

Under Section 80C of the Income Tax Act of 1961, a Tax-Saving Fixed Deposit account makes you eligible for earning interest while saving taxes by offering a deduction of up to Rs 1.5 lakh per annum. You have to lock in your invested amount for a minimum of 5-year periods and cannot withdraw the amount before this mandatory lock-in period. For people looking for an investment option which saves them taxes while not affecting their steady income, fixed deposits like Tax Saving FD are the best option as the rate of interest depends on the bank you make your investment in, and the interest received is taxable. 

How do Fixed Deposits function?

Fixed Deposits require you to deposit a lump sum for a specific period that suits your needs. Your money earns a fixed interest rate, ensuring that this rate remains constant, regardless of future interest rate changes.

Fixed Deposits are known for their stability and safety. They aren't affected by market ups and downs, making them a secure choice. Additionally, you can opt to renew your Fixed Deposit if you choose not to withdraw the funds at maturity.

Fixed Deposits are often favoured over regular savings accounts because they offer higher returns on your initial investment. Moreover, special Fixed Deposit schemes are available for senior citizens through banks and Non-Banking Financial Companies (NBFCs), providing them with even higher interest rates on their deposits.

Eligibility Criteria 

The eligibility criteria for the Tax Saver Fixed Deposit with ICICI Bank are as common as other Fixed Deposit criteria where the applicant must be above 18 years of age, should be a resident of India, and must be self-employed or a salaried employee. 

Benefits and Features

Let's look into the benefits and key features of the ICICI tax Saving FD scheme to understand comprehensively: 

• Tax-Saving: It saves up to Rs 1.5 lakh annually, reducing your taxable income. 
• Minimum 5-Year Lock-In: This special fixed deposit requires you to keep your money locked in for at least 5 years, unlike regular fixed deposits that offer more flexibility for withdrawal.
• Getting Started: A minimum amount of Rs 10000 is mandatory to open an account. Furthermore, you are allowed to invest upto Rs 1.5 annually.
• Tax on Returns: The interest you are receiving is taxable, so don't forget that you must report it as a part of your taxable income.
• Account Ownership: You can open a Tax Saving Fixed Deposit either in your name or jointly with someone else.
• Tax Benefits in Joint Accounts: If you opt for a joint account, the primary account holder reaps the tax benefits. However, both account holders have access to the fixed deposit receipt. In case of one account holder's demise, the surviving account holder receives the maturity amount.
• Nomination Facility: For added security and peace of mind, the depositor can nominate a beneficiary.
• No Loan or Overdraft: The ICICI Tax Saver Fixed Deposit doesn't offer the option of taking a loan or overdraft against it.
• Single Lump-Sum Deposit: You can make only a single lump-sum deposit into the ICICI Tax Saver Fixed Deposit. Additionally, it's crucial to decide on the maturity instructions while making your initial deposit.
• Interest Payout Options: With the ICICI Tax Saver FD, you can choose how you receive your interest. You can opt for monthly, quarterly, or yearly interest payments or decide to reinvest the interest as part of the principal. Reinvestment allows your money to grow through compounding, making it a smart choice if you don't need immediate access to the funds.

Taxes of the ICICI Bank Tax Saving Scheme

• Tax on Interest Income: The interest you earn is income from "other sources." It is added to your total income for the financial year and is subject to taxation at the applicable slab rate.
• Quarterly TDS Certificates: ICICI Bank will provide you with TDS certificates at the end of each quarter in the fiscal year. These certificates detail the amount of TDS deducted and the interest income.
• Threshold for TDS: TDS (Tax Deducted at Source) is applicable when the total interest earned or reinvested on FDs and RDs across all branches reaches Rs 40,000. For senior citizens, this limit is Rs. 50,000 per fiscal year.
• PAN Requirement: According to Section 206AA, individuals receiving income on which TDS is applicable must provide their PAN (Permanent Account Number). Failure to provide the PAN will result in TDS deduction at a higher rate of 20% rather than the standard rate. If your PAN information is not current or is incorrect with the bank, TDS will also be deducted at the 20% rate.

Conclusion

Investing in a Fixed Deposit is the traditional and safest way of investment; however, you should look for the ICICI Tax Saving FD scheme, which might be deemed more profitable for you. Knowing some important factors is important before investing in tax-saving fixed deposits. There are various benefits which you should use, and make a sound decision before any financial decision as it affects you and your family's future.