FEW FACTS ABOUT SAVING SCHEMES OFFERED BY BANKS

A) Some points related to Interest Rates on Bank Accounts

1) Interest on Savings A/c is calculated on daily balance basis.

2) Now, All Scheduled Commercial Banks (Excluding RRBs) have the discretion to offer differential interest rates based on whether the term deposits are with or without-premature-withdrawal-facility, subject to the following guidelines:

i.   All term deposits of individuals (held singly or jointly) of ₹ 15 lakh and below should, necessarily, have premature withdrawal facility.

ii.  For all term deposits other than (i) above, banks can offer deposits without the option of premature withdrawal as well.

iii. Banks should disclose in advance the schedule of interest rates payable on deposits i.e. all deposits mobilized by banks should be strictly in conformity with the published schedule.

B) Taxation of Savings Bank Interest rates: 

Unlike interest on fixed deposits, interest earned on savings bank accounts is not subject to Tax Deduction at Source. However, this does not mean the interest earned on Savings accounts is completely tax free. It is exempt upto Rs. 10,000 in a year, and if the interest you earn from Savings accounts crosses this threshold, it becomes subject to tax.

C) Senior Citizens Savings Scheme, 2004: 

A Scheme which is giving a higher interest rate to the senior citizens, if they make deposits in the banks.

The salient features of the Senior Citizens Savings Scheme, 2004 are given below:

Tenure of the deposit account	5 years, which can be extended by 3 years.
Rate of interest	9.3 per cent per annum
Investment to be in multiples of	Rs. 1000/-
Maximum investment limit	Rs. 15 lakh
Minimum eligible age for investment	60 years (55 years for those who have retired on superannuation or under a voluntary or special voluntary scheme). The retired personnel of Defense Services (excluding Civilian Defense Employees) will be eligible to invest irrespective of the age limits subject to the fulfillment of other specified conditions
Premature closure/withdrawal facility	Permitted after one year of opening the account but with penalty.
Modes of holding	Accounts can be held both in single and joint holding modes. Joint holding is allowed only with spouse.
Applicability to NRI, PIO and HUFs	Non Resident Indians (NRIs), Persons of Indian Origin (PIO) and Hindu Undivided Family (HUF) are not eligible to open an account under the Scheme.