Winning Bizness Desk

Mumbai. State Bank of India (SBI) has increased the interest rates on Fixed Deposits (FD). Actually, SBI has increased the interest rates on FDs of less than Rs 2 crore by 5 to 25 basis points. Now on getting FD in SBI, anyone can get interest from 3% to 7%. According to the official website of SBI, the new interest rates on FD have come into effect from February 15. SBI has made this announcement after increasing the repo rate of RBI. RBI has increased the repo rate by 25 basis points on 8 February. With this, now the repo rate has increased from 6.25% to 6.5%. Before SBI, many banks including Axis Bank, ICICI Bank and PNB have also increased the interest rates on FDs.

SBI will get 6.8% interest on 1 year FD

According to the new interest rates, if you now make FD in SBI for 1 year, then you will get interest at the rate of 6.8% per annum. At the same time, the bank will give the maximum interest of 7% on FD of 2 years. Apart from this, 6.5-6.5% interest will be available on FD of 3 and 5 years. Apart from this, SBI has also started a specific tenure scheme of 400 days. In this scheme, the bank is giving 7.10% interest to its customers. The scheme will be valid till 31 March. SBI has also increased MCLR by 10bps. The bank had earlier on December 13 increased the interest rate on FDs by 65bps for select tenures.

Interest earned from FD attracts tax

The interest earned from FD is fully taxable. Whatever interest you earn on FD in a year, it gets added to your annual income. Based on the total income, your tax slab is determined. Since the interest income earned on FD is considered as "Income from other sources", it is charged under Tax Deducted at Source or TDS. When your bank credits your interest income to your account, TDS is deducted at the same time.

Some points related to tax on FD

Banks do not deduct TDS on Fixed Deposits if your total income is less than Rs 2.5 lakh in a year. However, for this you will have to submit Form 15G or 15H. In such a situation, if you want to save TDS, then definitely submit Form 15G or 15H. TDS is not deducted if your interest income from all FDs is less than Rs 40,000 in a year. On the other hand, if your interest income is more than Rs 40,000, then 10% TDS will be deducted. Banks can deduct 20% for not giving PAN cards. This limit for deducting TDS on interest income above Rs 40,000 is for people below 60 years of age. On the other hand, the income of senior citizens above 60 years of age up to Rs 50,000 from FD is tax free. 10% TDS is deducted if the income is more than this. If the bank has deducted TDS on your FD interest income and your total income is not subject to income tax, then you can claim the deducted TDS while filing tax. This will be credited to your account.