basics about bank deposits.

Advantages OF BANK DEPOSITS : 3-5 years 6.75-8 %
Bank deposits are the safest investment after Post office savings because all bank deposits are insured under the Deposit Insurance & Credit Guarantee Scheme of India.
It is possible to get a loans up to75- 90% of the deposit amount from banks against fixed deposit receipts.
The interest charged will be 2% more than the rate of interest earned by the deposit.
With effect from A.Y. 1998-99, investment on bank deposits, along with other specified incomes, is exempt from income tax up to a limit of Rs.12, 000/- under Section 80L.

Also, from A.Y. 1993-94, bank deposits are totally exempt from wealth tax. The 1995 Finance Bill Proposals introduced tax deduction at source (TDS) on fixed deposits on interest incomes of Rs.5000/- and above per annum.

POSTAL TIME DEPOSITS :
(Quarterly Compound Interest)

5 years -7.5%
The rate of interest is relatively high compared to the 4.5% annual interest rates provided by banks.
Although the amount invested in this scheme is not exempted as per section 88 of Income Tax, the amount of interest earned is tax free under Section 80-L of Income Tax Act.

Tax Deductions For Re-investment Fixed Deposits :

The following will be applicable for a Regular Fixed Deposit
TDS will be deducted when interest payable or reinvested per customer, per branch, exceeds Rs 10,000 in a financial year.
A consolidated Annual TDS Certificate will be mailed to you after the end of the financial year, including details of all TDS deductions during the year.

Applicable TDS rates are:
INTERESTS Payment equal to & above 10 lacs : 11.33%.

If you are exempt from paying tax, you need to present Form 15H when you open a Fixed Deposit and subsequently at the beginning of the following financial year.
At the end of the financial year, the TDS will be deducted on the basis of interest accrued on the Fixed Deposit (s) even if this interest has not been credited.

UTI BANK :
2 years to less than 3 years :
9 % for below 15 lacs.
10 %(FOR SENIOR CITIZENS)
9% FOR ABOVE 15LAC DEPOSIT.