5 MinsMarch 28, 2022
A Savings Account is designed to meet the banking needs of people from all walks of life. It is used for receiving money, paying utility bills, transferring money, remittance, withdrawals, and so on. Additionally, a Savings Account also allows
you to plan your finances better. Here’s how:
- Helps to keep your finances organised
- Makes it easy to track and keep a check on avoidable expenses
- Helps you to save your money with a target
- Earns interest at the rate of around 3.0%-3.5% per annum
- Helps to maintain a surplus that can be invested in productive avenues
Axis Bank offers a variety of Savings Accounts, with frills and no-frills, catering to your needs and financial habits as a customer. You have the Regular Savings Account,
Small Basic Savings Account with zero balance facility, Salary Account, Senior Citizen Savings Account,
Future Savings Account for children, and many more, each with distinguishing features and benefits. Make sure you are holding a Savings Account that suits your needs.
Taxation on Savings Account
Interest earned on Savings Accounts across banks is tax exempt up to Rs 10,000 under Section 80TTA of the Income Tax Act, 1961, for those up to 60 years of age.
Likewise, if you are above 60 years, you can avail of the deduction available under Section 80TTB of the Income Tax Act, 1961 for up to Rs 50,000 on the interest earned not just on the Savings Account, but also on your fixed deposits.
Four investment avenues that you can link with your Savings Account are:
- Fixed Deposit: Link your Savings Account to an FD and automatically transfer the money into the FD when the balance in your Savings Account crosses a certain amount, say Rs 25,000. By doing so, you would be able to meet your
liquidity needs and earn a higher interest rate.
[Also Read: Features to look for when opening a digital savings account]
- Recurring Deposits: By linking your Savings Account with an RD, you can save small amounts regularly, every month. This is an easy way to save for your short and medium goals, such as down payment of your home loan, a
new car, planning a vacation, paying your child’s school fees, and so on.
- SIP in mutual funds: You could start a daily, monthly, or quarterly Systematic Investment Plan in mutual funds (commensurate with your risk appetite) from your Savings Account. This will help you save for long-term
goals, such as children’s higher education expenses, wedding expenses, your retirement, etc. Investing in mutual funds helps you benefit from rupee cost averaging, compound money effectively, and focus on ‘time in the market’,
rather than worry about timing the market.
- PPF and NPS: These government-backed schemes can help you save for your retirement corpus. PPF offers fixed returns (currently 7.1% p.a. and subject to change as per government notification) and is also tax efficient.
The contributions you make are entitled to a deduction (of up to Rs 1.50 lakh) under Section 80C, interest is tax-free, and maturity proceeds also are exempt from tax. NPS offers market-linked returns by investing in equities, government
securities and corporate bonds. The proportion of investment in each asset class will vary depending on whether you choose the ‘Active Choice’ or the lifecycle fund (Auto Choice). You can link your PPF and NPS accounts with
your Savings Account and invest every month.
Make your money work for you by saving and investing it prudently and smartly using your Savings Account.
Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision