SBI Deposit Schemes: SBI’s Tax Savings Scheme 2006 vs Flexi Fixed Deposit – Benefits, Interest Rates and Tax Benefits

The State Bank of India (SBI) provides many savings schemes to its customers. One of the most common among these deposit schemes are SBI’s Tax Savings Scheme and Flexi Deposit Scheme. In SBI’s Tax Savings Scheme, the bank offers tax benefits for up to Rs 1.5 lakh under Section 80C of I-T Act. As for the Flexi Deposit Scheme, the product is similar to a recurring deposit scheme, but instead of a single fixed instalment every month, you can decide to vary your instalment amount and even the number of monthly deposit, within the annual sum defined.

SBI’s Tax Savings Scheme 2006:

For a person to have an account under this scheme, s/he needs to be a resident of India, or in the capacity of the Karta of a Hindu undivided family, with a PAN card. The minimum amount to be deposited in the account is Rs 1,000 or in its multiples. The maximum deposit should not be more than Rs 1.5 lakh, according to SBI.

There are two types of accounts under the SBI’s Tax Savings Scheme – Term Deposit (TD) account/ Special Term Deposit (STD) account. The minimum tenure is for five years while the maximum is 10 years. The interest rate on the scheme is similar to that of term deposits.

The premature withdrawal facility is not available before five years from the date of its receipt. Also, the loan facility is not available.

SBI’s Flexi Deposit Scheme:

Under the scheme, the minimum deposit amount is Rs 5,000 while the maximum deposit amount is Rs 50,000. Deposits can be made anytime during a month and any number of times. The minimum tenure is five years and the maximum is seven years. The penalty for default in the payment of the minimum deposit will be Rs.50/- per financial year.

Similar to the SBI’s Tax Savings Scheme 2006, the rate of interest is same as applicable to the term deposits. However, quarterly compound interest is also applicable.

Premature withdrawal under SBI’s Flexi Deposit Scheme is allowed. The rate applicable in case of premature withdrawal shall be 0.50% below the rate applicable for the period the deposit has remained with the bank.