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, you will 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.
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.
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.