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Best fixed deposit (FD) interest rate by Indian banks

March 14th, 2007 | Tag(s): Investing | Popularity: 100% [?] |

With the financial year-end approaching fast, banks are offering excellent fixed deposit (FD) interest rates to attract liquidity (previous post):

Business Standard: Deposit Chase: Banks offer double digit interest
- IndusInd Bank: 10% for 100-days
- Canara Bank: 9.5% for one-year
- ICICI Bank: 9.5% for 590 days
- State Bank of India (SBI): 9.5% for 4-years
Economic Times: Banks tread a grey zone for deposits
- Bulk deposits cost about 2-3 % more considering that banks are offering 9% on special scheme for three years against 11-11 .3% for one-year bulk deposit.

Indian Fixed Deposit Rates: 1970s - 2007

Comparing loan & fixed deposit rates

Fixed deposits in India: Time to get in?

Banks boosting FD rates one last time

Fixed Maturity Plans (FMPs) vs. Fixed Deposits

74 comments:

Nikhil [March 14th, 2007]:

Additional Information:
Since Bank Deposits are subject to TDS, it may not be suitable for large investment. Alternatively suggest FMPs. The latest sample offering are as below. Note that if invested in March 07 and if maturity is in April/May 08, you get double indexation benefit.

1. Birla FTP Series - 400 days - 10.35 (Institutional plan) and 9.9% retail plan (indicative)
2.Prud.ICICI - FMP - 13 Months- 10.3/10.0
3.JM FMP - 395 days - 10.4
4.Principal-PNB - FMP - 460 days- 10.30/9.75
Ananth [March 15th, 2007]:

Is there a single site where one can get the latest information on all debt oriented schemes from bank deposits to FMPs
Kaushik [March 15th, 2007]:

Ananth: Not that I know of. If you do find one, please post it here as well!
Nikhil [March 15th, 2007]:

FMPs normally are notified by Fund House at short notice. You will get information from your local fund broker. Normally Feb./Mar is the season for FMPs for obvious tax advantage for HNIs.
Shilpa [March 20th, 2007]:

Nikhil and others, what is “TDS”? I imagine it has something to do with Tax. What is “FMP”, I’m assuming it’s something to do with Tax free???

Anyway, I won’t guess and let you answer as I need some help.
I’m an NRI and would like to invest some amount. Can I open one of these accounts as NRI?? What are the tax implications??

My parents are in India and I can certainly open accounts under their name and tranfer all funds to them in worst case.

Thanks for all your help.
Kaushik [March 20th, 2007]:

Shilpa,
TDS = Tax Deducted at Source. The bank deducts tax before returning your FD principal + interest.
FMP = Fixed maturity plan. Similar to fixed deposit but in the form of a mutual fund.

As an NRI, you can not use regular FDs. You can open NRE / NRO / FCNR accounts - google these acronyms for explanations.

Your parents can certainly open FD / FMP accounts. If they are aged 65+, they can also get 0.5% more on FDs.

Cheers,
Kaushik
Nikhil [March 20th, 2007]:

Shilpa,
As an NRI, I also had the problem of choice.
Today I learnt that some Banks are offering special taxfree NRE rupee deposit offering 366 days (limited offer, they say). Please contact Banks like Citibank, HSBC. This is slightly less than FMPs which are offering 10.5% (without indexation). But it is very convenient.
Nikhil [March 20th, 2007]:

The interest rate is 8.1% taxfree.
Nikhil [March 20th, 2007]:

Today I invested some dollars into Indian Rupee NRI deposit at 8.1% Tax free(366 days), thro HSBC. They expect about 2% rupee appreciation from 44 to 43 in one year. So it could give 10% on Dollar. Better than subprime Mortgage (LOL)
Shilpa [March 20th, 2007]:

Thanks a lot, Kaushik and Nikhil!

Kaushik, my parents are over 65, I saw 10.5% advertised for elderly with “indusbank” or so for 100 days, 10% with ICICI…
Assuming it’s their only income, what % of tax will they pay on,
let’s say, a 15 Lakh investment??

Nikhil, the HSBC option is not bad at all. Did you do
everthing online? Where do I start? Which website? HSBC has so many…
Nikhil [March 21st, 2007]:

Shilpa;
Look at this site, on the right side click NRI Centres and contact the person mentioned. They will do the needful.

http://www.hsbc.co.in/1/2/personal/nri-services/usa
Winner [March 28th, 2007]:

Today I invested some dollars into Indian Rupee NRI deposit at 8.1% Tax free(366 days), thro HSBC. They expect about 2% rupee appreciation from 44 to 43 in one year. So it could give 10% on Dollar. Better than subprime Mortgage (LOL)

Nikhil,
I called HSBC and tried getting the deal @8.1% without tax, but they were unable to help. The best was 5.75% for NRE (without tax) and 10% for NRO (WITH TAX) - which do not make sense if 36% tax is deductable. Let me know more - how u did it and if possibel the branch and the person details. Thanks.
Nikhil [March 28th, 2007]:

I made it thro Mr. Akash Rastogi, akashrastogi@hsbc.com.hk
coolvoila [March 30th, 2007]:

Hello Nikhil
I called HSBS and they told me the 8.1% is for the NRO acct and the interest is not tax free and of course there are issues with repatriating money back into US with NRO accts .Did you also go through the same scheme or was it something else. More specific deatils from you would be much appreciated for beginners like us
Gurivi [March 30th, 2007]:

Hi,
I’m living in US for around 2 yrs. I have my IDBI saving (Not any NRE/NRE/NRO) accounts in INDIA which is active and I still perform some online transaction to maintain it live.
Now since they are ofering 9.5% on regular FD and I can open it easily with a click of a button my question is that can I do this?
Or I have to open an NRI account with them, in this case will get the same intest rate?

If any of you know the answers or gone through with similar thing then please suggest.

Thanks.
Gurivi.
Kaushik [March 30th, 2007]:

Coolvoila: I must say that I too found it unlikely that the 8.1% rate was tax-free; as for NRO repatriation, check this comparison table: https://www.online.citibank.co.in/portal/newgen/seo/nri/foreign-currency-account.htm?site=PORTAL&creative=NGR&section=NHS01L02&agencyCode=XER&campaignCode=FCNRP&productCode=FCNR&eOfferCode=NHS01L02

Gurivi: I haven’t had an occasion to do this, but I wonder if legally you can avail of resident FDs when you are clearly an NRI. If you do open an NRI account with them, you would get a lower rate - corresponding to NRO / NRE / FCNR accounts.
coolvoila [March 30th, 2007]:

So how does one get the 8.1% or so interest rate for people with funds in US….I am sorry I am still not clear how the 8.1% is tax free and fully repatriable …kindly advise ..are there any better options we can look at besides this one
Trader [March 30th, 2007]:

A FCNR account with a one year forward cover of rupee should give you this. But the downside is if Rupee depreciates compared to rate at which you bought the cover. You will take back less dollars. Normally USD has a premium over INR of about 3 to 4 % for one year.
Nikhil [March 30th, 2007]:

It is as simple, take advantage of market imperfection. FX Market is betting that Rupee will depriciate by about 3 to 4% in one year. But if you believe that Rupee will appreciate go ahead and do the trade with your FCNR account (only NRIs can do). This will be specially good for those who want to come back to India in about a year’s time.
Unfortunately this arrangement will not have premature withdrawal or loan against deposit as the FCNR has a lien in the forward trade.
Nikhil [March 31st, 2007]:

Gurivi: Please note that as an NRI your investment avenues are restricted by present law. You cannot invest in PPF, NSC, POMIS, FDs like a resident can do. Further your NRO account or deposits will be subject to TDS of 33% of the interest. You can only access fixed income products (including FMPs) thro mutual funds, where again it is subject to TDS of 20% for long term cap. gains (without indexation) and 30% for short term. And finally NRE/FCNR deposits give you interest rates well below inflation. So you will have to really work hard to find suitable avenues to increase your yield on your savings. I have been getting my refunds on TDS after 3 years thanks to our efficient IT department. But my resident friends still envy me because they say “you pay no tax on your income in India”.
Gurivi [March 31st, 2007]:

Thanks Kaushik,
An intersting conversion is going on FX rates (esp USD/INR). Just would like make a comment that INR is expected to appreciate further since RBI hiked the CRR y’day.So this trend will be there for some time now but we can start to see depreciation around June-July onwards. Be cautious about investing in FX for a short term.
venky [March 31st, 2007]:

Be careful, about IndusInd 10% for 100 days. This 10% is for 365 days and they divide the interest amount for per 100 days. Eg:
If your Principal is Rs.1000, interest amount would Rs.100 for a year. They divide this amount per 100 days and you will end up getting Rs.30 days for 100 days.
Ram [April 10th, 2007]:

I noticed in the ABN AMRO site that effective 9th april 2007 the FD rates for domestic deposits for an ordinary resident indian has been revised.
it reads as below for 99 days it is 9.5% and for 188 days it is 10.25% and for 400 days it is 10.25% but for the periods in between it is lower.
Tenor Rates upto Rs. 15 Lacs
7 days -
8 days upto 14 days -
15 days upto 30 days 4.00%
31 days upto 45 days 5.50%
46 days upto 60 days 5.50%
61 days upto 75 days 5.50%
76 days upto 90 days 5.50%
91 days upto 98 days 5.75%
99 days upto 99 days 9.50%
100 days upto 120 days 5.75%
121 days upto 150 days 5.75%
151 days upto 180 days 5.75%
181 days upto 187 days 5.75%
188 days upto 188 days 10.25%
189 days upto 7 months 5.75%
7 months 1 day upto 8 months 5.75%
8 months 1 day upto 9 months 6.00%
9 months 1 day upto 287 days 6.00%
288 days upto 288 days 7.50%
289 days upto 10 Months 6.00%
10 months 1 day upto 11 months 6.00%
11 months 1 day upto 1 year 6.00%
1 year 1 day upto 399 Days 6.25%
400 days upto 400 days 10.25%
401 Days upto 18 months 6.25%
18 months 1 Day upto 23 Months 6.35%
23 Months 1 Day upto 2 Years 8.50%
2 years 1 day upto 3 years 6.50%
3 years 1 day upto 3 years 2 days 6.75%
3 years 3 days upto 3 years 3 days 7.00%
3 years 4 days upto 4 years 6.75%
4 years 1 day upto 5 years 6.75%

You can also visit the website www.abnamro.co.in and search within consumer banking. Happy investing.
kk [April 11th, 2007]:

ABN Amro gives 10.25% for 188 days upto 188 days and also for 400 days.
KK [April 12th, 2007]:

Ooops!!! I didn’t notice the comment from Ram regarding ABN Amro interest rates. Sorry…
Rakesh [May 5th, 2007]:

Interesting article. So ABN Amro is currently offering the highest interest rate? Is there any bank offering an interest rate that is higher than that offered by ABN Amro.
I found a thought provoking article on fixed deposits. Wanted to share it with you guys.
http://www.bullishindian.com/highest-fixed-deposit-interest-rate/185/
Nikhil [May 5th, 2007]:

As of date Foreign banks are offering about 11.5% interest on 366 days deposit. Interest rates for other tenures are less. Seems there is liquidity crunch still in the market.
Rakesh [May 5th, 2007]:

Hello Nikhil, Can you name a bank which is offering 11.5% on an yearly deposit?
Nikhil [May 5th, 2007]:

These high rates are for bulk deposits (>15 Lakhs). Go to any banks like Citibank, HSBC and ask them rates for bulk deposits. Co-Op. banks like Saraswat Bank will give you higher rates for bulk deposits. If you are more adventurous try smaller Co-Op. banks and you will be amazed at the rates for one year deposits. These small Bank Managers will do anything to meet their targets.
Rakesh [May 6th, 2007]:

That’s interesting. But for a deposit of less than 15 lakhs, the highest interest offered is still the 10.25% offered by ABN Amro?
Nikhil [May 7th, 2007]:

May be u r right. Most of these banks are now into micro credit, including Singapore’s Temasek. As long as Rickshaw owner/truck owner/caterer/haircutting saloon is willing to pay 18%, have a nice ride. The moment economy turns for worse (foreign induced recession or any other political or slowdown, which is very difficult to predict)interest rates may soften. If you don’t want to speculate then a bird in hand is worth 2 in the bush.
Gurivi [May 7th, 2007]:

How can we open a term deposit with ABN-AMRO India for 1 10.25% rate while sitting here in US.

Any comments?
Rakesh [May 9th, 2007]:

Looks like ABN Amro will withdraw the 10.25% scheme soon, because its way above the rates offered by other banks. Indus Ind bank has withdrawn its 10% scheme. So, for now ABN Amro is the only bank offering interest rate in double digits, in the less than 15 lakhs category. I called them and asked them to send an agent with the forms to finish the formalities for opening a fixed deposit. Its been 1 week since i called them, but still no news from their side.
Rakesh [May 9th, 2007]:

Has the limit for TDS been increased to Rs.10000 from Rs.5000? If so from when is this change effective?
Kaushik [May 10th, 2007]:

Rakesh: Yes, the TDS limit is now Rs. 10000, effective June 1, 2007.

http://www.hindu.com/2007/03/02/stories/2007030206141700.htm
Puneet [May 14th, 2007]:

Hi i am puneet From HSBC pedder road branch ..we are offering an interest rate of 11.5 % for any Fixed Deposit above 15 lakhs INR and a senior citizen benefit of 0.25 % for a tenure of 366 days .. we also have many other schemes .. if intrested call on +91 98191 xxxxx anytime before may 31st ..thank you .
Aman [May 15th, 2007]:

Lord Krishna Bank: 10% for 91-120 days. 10.5% for Senior Citizens.
Ravi [May 16th, 2007]:

Kotak Mahindra Bank is offering 10.5% for less than 2 years FD.
Ronak [June 8th, 2007]:

Tamilnad mercantile bank is giving 10.5% interest normal not annualised for 55 months and 10.75% for senior citizens.
Rushh [June 9th, 2007]:

Seems i made a mistake by putting mine at 9.5% sometime back. The rates keep rising
Rakesh [June 15th, 2007]:

Between Kotak and Tamilnadu mercantile bank, I would prefer Kotak. Also customer service seems to be great in Kotak.
Courtesy : http://www.bullishindian.com/kotak-offers-highest-fixed-deposit-fd-rate-in-india/348/

@ Rush : Even i made a similar mistake. Went for a 9.5% deposit with corporation bank. One of my deposit with city union bank (8.5% interest) will be maturing soon. I’m looking at putting that with Kotak Mahindra Bank
Rajiv [June 17th, 2007]:

i’m in US , how can i invest money and earn this high interst rate ?. Do i have to be in india to open account and receive 9-10% interest rate ?
Gurvi [June 22nd, 2007]:

An intersting read:-
Western execs don’t know basics of India

http://timesofindia.indiatimes.com/Business/India_Business/Western_execs_dont_know_basics_of_India/articleshow/2140098.cms
sudhir [July 7th, 2007]:

where should i invest to get maximum returns along with tax saving other than section 80 c.
Nikhil [July 14th, 2007]:

My latest safe investments bets are into Arbitrage funds. Reason:they behave like debt fund but you get capital gain exemption like equity funds.

Secondly, after watching their performance for the last one year I am now comfortable enough to assume that fund managers are still able to find opportunities in the market. Expected return about 10% tax free (if held for one year).
RamV [July 19th, 2007]:

http://www.ratekhoj.com is a new website giving the best Fixed Deposit Rates for Indian Residents as well as NRIs. It gives you the ability to compare FD rates based on different criteria. Your feedback is welcome to help improve the site further.
Devarajan [July 22nd, 2007]:

Where can I get USD/INR forward cover rates for 1,2,3 years. Is it avilable in RBI site or who determines this rates and heard banks can fix these rates within some range according to market conditions and their funds requirement.
Can some one highlight this product and which are the banks actively doing this for NRI’s
zahir [July 31st, 2007]:

“Compounding is the eighth wonder of the world.”
-Albert Einstein
“Take away the terms asset allocation, long term and compounding from a financial advisor’s vocabulary, and he is pretty much tongue-tied,” remarks a friend.
Let me show you exactly how much saving can help. Say you spend Rs 40 every day on cigarettes. Let us see what could happen if you stopped smoking.Read full article:
http://diggindianews.com/IndiaBusiness/The_secret_to_making_crores_is_out__money_property_savings/
raj [September 26th, 2007]:

actually i was working in company that company is offered me around 3 lacs for resign. so i want to know is this taxable income & i am also interested to invest in FD. Is any body help me which bank providing highest interest rate.
Motttu koomar [October 26th, 2007]:

Hey raj lord krishna and karur vysya banks certainly not.Bother about other banks
Praveen [December 3rd, 2007]:

What is the minimum amount that is out of

When a bank ask for ITR for its customer deposit in saving account.

Let i have 20k rs this month. The next month i deposit 10L in this case, Could the bank ask me to present tax return..

Actually .. i don’t know the deposite scheme in a saving or current account
Mumbhai [January 26th, 2008]:

Hi folks,

This is a great place to be with so much of info and thanks to Nikhil and others who have been participating and sharing!

Please help me refresh my basics.

If NRI FD is giving annual interest of about 4%(tax free) and NRO FD is giving about 9%(taxable), which one is better?

I believe NRO since, if 30% tax is deducted, you are left with 70% of 9%, which is say 6%. If this is tru, why would anyone go with NRI FD at all?

Thanks!
Nikhil [January 28th, 2008]:

Thanks for your compliments. Yes you are correct NRO deposits yields are better compared to NRE deposits. But the problem is getting back 30% TDS from IT authorities.

I had good deposit rates back in June07 when NRO deposits fetched around 11%. But since then it has dropped back.

As far as NRE deposits are concerned it is useless.

But now I have invested completely into Arbitrage funds which are better than NRE and NRO deposits. Their yield is around 10% tax free if held for one year or more. Worth it.

Happy debt/safe investing.

But now my best best is
MumBhai [January 29th, 2008]:

Can anyone suggest me a safe investment like Fixed Deposit or similar in India for NRIs to earn a good monthly income? For residents there are several options like Post Office, PPF, FDs, Senior Citizen scheme, etc with 9% - 11%. But for NRIs, I have been searching for something similar. Are FDs safe or insured?? In USA, they are FDI insured upto 100,000 USD but in India, how safe are they??

My wish is to invest about 50 lacs in some safe investment option for next 10 years or so and earn a regular monthly income of say 10%. After tax on interest, it will be still a decent 6%.

I have read about Arbitrate fund but it is for someone who has time to play with the volatility of the market.

Please advise.
Nikhil [January 29th, 2008]:

MumBhai: I had similar problem being NRI. I have invested some money into 4 arbitrage funds. 1. SBI arbitrage opportunity fund. 2. JM Arbitrage Fund. 3 Standard Chartered Arbitrage fund.4) Kotak Arbitrage fund. One year returns of these funds are around 10% and that is tax free. No hassle with Income Tax. You can invest as NRI on repatriation basis. What else you want. If the Rupee appreciates like it did for me I made in US dollar terms 10% + appreciation of 13% on rupee when I invested at 45.55 Rs/$. Fantastic return of 23% in Dollar terms. For further details on these funds look into and check Debt Speciality.
Nikhil [January 29th, 2008]:

Sorry look into Valueresearch.com and look at Debt Speciality for details on Arbitrage funds.
MumBhai [February 5th, 2008]:

The Arbitrage funds seems to be a good option due to tax advantage.

However, I am looking for safer and guaranteed returns for about 10 years and I feel Fixed Deposits serves the purpose.

However, being an NRI, I am not sure which option is better.

1. NRO Deposits or
2. Gift to my parents and then invest in Senior Citizen Scheme and PPF.
3. Is PPF still good for 20% Tax Rebate and 100% Tax-Free lumpsum amount after maturity?

Any suggestions with rough calculations for an amount of Rs. 50 Lacs?
I found UCO Bank with highest interest rates as of today. Also, I understand that the nationalized banks are safer and the ENTIRE amount is FULLY protected.

Please help and thanks again!
MumBhai [February 5th, 2008]:

THANKS TO WEBSITES LIKE THESE, WHERE PEOPLE CAN SHARE AND PARTICIPATE !!! IT IS SO HARD TO GET CORRECT INFO ON SO MANY QUESTIONS…NOT UNIQUE BUT EVEN COMMON QS…..

ANOTHER ONE -

For NRI - Everywhere they say that Rental Income from a property in India has to be credited to NRO A/C. Is it mandatory?

I would like to gift the monthly rent to my parents as a monthly income and then let them decide if they want to manage it. Is this ALLOWED?

Do I still need to pay any tax on it?

Please someone answer this question or direct me to some experts who can answer me at the earliest.

Thanks a ton !!!
Nikhil [February 5th, 2008]:

There are many choices but you have to choose depending upon your particular situation.

1. NRO Deposits/Bank Deposts: You will have to wait and see if the interest rates peak. At the present time you may max. get 9 to 9.5% for 5 years. Not so great. Roughly 10 Lakhs invested will give you Rs. 7,500 pm. Fully taxable

2. Post Office Monthly Income Scheme- 8%(Max. Limit: 4.5L for Single account or 9L for joint account). Will give you Rs. 6000 pm max for 6 years.

3. Senior Citizen Scheme: Max. 15L. Will give you 9%. for 5 years.Max. Limit = 15L.

4.Life Insurance Immediate Annuity: About 10 Lakhs invested will give you monthly income of 5700 fully taxable

5.Mutual Funds MIPs: These are market related and could give betweeen 8 to 12% for 20% equity exposure.

6.Then good old PPF.

7. Additionally you can also consider Health Insurance for over sixty parents like Varishta Mediclaim which gives 3 Lakhs cover for about Rs. 7000 per year.

So it is your choice. But mind you: if you gift to parents :that gift can be claimed by your sisters or brothers if the money is not willed to you on their demise. For this specific reason I avoided gifting. I did’nt want family tensions.
MumBhai [February 5th, 2008]:

Nikhil,

Yes, I have thought about family tensions too but then I may have to go with clean nomination and/or Will for that matter.

Would you know if a gift deed with notary and stamp paper is MUST?
I was going to write a simple letter with account and address details, gift amount having signatures of me and my parents on a piece of paper. Is this enough for the Tax Devils?

Also, can I show the rental income from my property in India as a monthly gift to my parents and avoid income tax? The rental income is the only income I have in India and I did want to get into PAN and NRO crap.

THANK YOU VERY MUCH FOR YOUR TIME !!
Nikhil [February 6th, 2008]:

Nomination or Will not OK. Nomination is only temporary holder of asset. Will finally decides everything.

Gift deed - No need for stamp paper. Just plain paper gift deed will be OK.

Money can be gifted to parents as long as it is “tax paid”. If you are filing returns then which every way you do it is OK.
MumBhai [February 6th, 2008]:

Nikhil,

I can’t thank you enough for your prompt responses thus far.
This thread is becoming more like Q and A rather than discussion. Where are the other fellas?

Preparing a gift deed on Stamp Paper is difficult in USA, I am very happy to know that a simple typewritten letter is sufficient for the gift.

If Gift money has to be after tax then, I am in for a problem as I have deposited the rental income in a local resident savings account that was opened jointly with my mother long long time back. Whereas, it was supposed to be deposited in NRO a/c, I do not have one. Is there any better option for me at this point to handle this situation other than hiding it?
Nikhil [February 7th, 2008]:

Any resident account can be converted to NRO account by just giving a letter to the bank and telling them that you have become a non resident and to designate the account as NRO. It is that simple. The only diff. between NRO and Resident account is that interest on the NRO account will be tax deducted. So in your case as long as you account for the rental income from property and pay tax if any there is no problem. I had 2 rental property and had a joint resident account and IT did not bother me. Mind you my IT returns being scrutised by IT for 2 consecutive years. Just last month I finished one with IT and now the next one is one. But no problem as long as you pay tax due and file returns.
MumBhai [February 7th, 2008]:

Are you an NRI as well? How did you manage to meet with IT people?

Well, here is the situation that is bothering me really -

1. I have been an NRI for past 8 years.
2. I started receiving rent from Aug 2007 (6 months advance). I gifted it to my mother along with another amount from my NRE income. We deposited it in our joint resident a/c initially and later mother’s FD for next 3 years now.
3. I do not have PAN card yet. I am in US and I am going to have my father apply for PAN in Feb 2008 (last week).

I called ICICI and they said I can simply write an email to Accounts manager for NRO a/c and it will be done.

What I don’t understand is, should I open NRO a/c and put my NRE money into it and show it as rent since my actual rent is in mom’s FD now? And then let bank do TDS on my NRO a/c?

Or

I must get PAN and pay tax on the rental income from Aug-Mar myself?

I think this part is contradictory to everybody in my situation. The following example may be useful to others as well….

If you check online, they say -
Tax from rental income for NRI’s is calculated as -
(40,000 x 12) = 4,80,000
- 30% for maintenance
= taxable income of Rs 3,36,000.
Deduct 10%, 20% and 30%…………so on using the tax brackets.

On the contrary, they also say -
For NRIs, the rental income from the property in India must be credited into NRO a/c within 2 months of receiving it, where 30.6% TDS is applied.

Which of the above 2 rules apply to me?

If it is either one, then what should I do now considering my actual situation as described in the beginning?
I feel that paying tax myself using PAN is a better option, since I do not have nro a/c or file for any returns if I had one. But pls mind that the rent was gifted to my mom.

Pls advise……

THANK YOU, THANK YOU, THANK YOU !!!!
Nikhil [February 8th, 2008]:

I am a NRI for the past 13 years. I do my IT filing thro’ a consultant. I had two properties and rental income like yours and in my case my consultant followed rule 1. My consultant meets with IT people. As a NRI it is advisable to appoint a IT consultant as they know all the “rules” and saves you problems. I have been scrutinised 4 times in the last 12 years but he handles everything. Last month he announced that IT computers have picked me up again for scrutiny of my last year returns. But never mind, that is life. Good luck.
MumBhai [February 8th, 2008]:

I think I should appoint a Chartered Accountant as well.

I am very much relieved to know that Rule # 1 is valid and accepted by IT Devils. All that I have to worry now is to get a PAN card on time and pay the tax on the rent. This way Tax is much lower than TDS …woooo hoooo

And you also advised me earlier that a simple letter stating the gift is valid and accepted by IT. Stamp paper and notary is not must.
So I just finished typing the letter and printed it. Another relief !

I think I am safe now.

Nikhil, Thanks a lot for your time and your valuable inputs !

By the way, is your IT consultant located in Mumbai and charges reasonable fees for the entire thing? May be you can refer me.
Nikhil [February 8th, 2008]:

While making gift deed it is important to mention the cheque Number and date. IT guys check the cheque number.

There are many consultants in Mumbai. All of them are well wired with IT guys. Good Luck.
MumBhai [February 8th, 2008]:

Perfect!

Sorry for one confusion - I was comparing apples and oranges when I mentioned my case. I realized that TDS is only on the interest earned in NRO if I had deposited th rent and has nothing to do with the tax on the whole rental income. I still have to pay tax on the rent. I mixed them up…my bad.
MumBhai [February 11th, 2008]:

Current Highest Fixed Deposit Rates in Banks for Residents
Compare rates in India for fixed deposits using our search tools. Compare fixed deposit rates using criteria such as fixed deposit period, institution type, citizen type (senior/non-senior) and tax savings fixed deposit schemes.

Highest Fixed Deposit Rates for non-seniors
Duration Institutions Rate
3 months Punjab and Sind Bank 8.25
6 months Punjab and Sind Bank
Development Credit Bank 8.25
1 year DBS Bank 9.25
2 years DBS Bank 9.75
3 years Tamilnad Mercantile Bank 9.50
4 years Tamilnad Mercantile Bank
Lakshmi Vilas Bank 9.50
5 years Tamilnad Mercantile Bank
Lakshmi Vilas Bank 9.50
>5 years Tamilnad Mercantile Bank 10.00

Highest Fixed Deposit Rates for seniors
Duration Institutions Rate
3 months Punjab and Sind Bank 8.25
6 months Development Credit Bank 8.75
1 year DBS Bank 9.75
2 years Axis Bank
DBS Bank
South Indian Bank
Tamilnad Mercantile Bank 10.00
3 years Axis Bank
South Indian Bank
Tamilnad Mercantile Bank 10.00
4 years Catholic Syrian Bank
South Indian Bank 10.25
5 years Catholic Syrian Bank
South Indian Bank 10.25
>5 years Tamilnad Mercantile Bank 10.25
MumBhai [February 11th, 2008]:

TAMILNADU MERCANTILE BANK IS OFFERING HIGHEST INTEREST RATE ON FD - 10 TO 10.35% !!
MumBhai [February 11th, 2008]:

Folks,

Read this link about deposits and its insurance - http://dicgc.org.in/html/faq.htm

I am shocked to learn that the fixed deposits in any Indian banks are insured only up to Rs. 1,00,000 (one lac) !!!

This is silly…..

If it is applicable for each account and not each customer then it may be a good idea for a single customer to open 10 different FD accounts in a bank for investing 10 lacs.

This kind of insurance will probably guarantee that one will not come down to road, should the bank close down….
MumBhai [February 12th, 2008]:

RBI further states how one is totally screwed with insured deposits -

http://www.rbi.org.in/scripts/FAQView.aspx?Id=64

Q5 What is the ceiling on amount of Insured deposits kept by one person in different branches of a bank?

The deposits kept by one person in different branches of a bank are aggregated for the purpose of insurance cover and presently a maximum amount upto Rupees one lakh is paid.

Q6 Does the DICGC insure just the principal deposit amount or both principal and
accrued interest?

The DICGC insures principal and interest upto a maximum amount of Rs. One lakh. For example, if an individual had deposit(s) with principal amount of Rs.95,000 plus accrued interest of Rs.4,000, the total amount insured by the DICGC would be Rs.99,000. If, however, the principal amount were Rs. One lakh, the accrued interest would not be insured, not because it was interest but because the amount was over the insurance limit.

Q7 Can deposit insurance be increased by depositing funds into several different accounts all at the same bank?

No. All funds held in the same type of ownership at the same bank are added together before deposit insurance is determined. If the funds are in different types of ownership or are deposited into separate banks they would then be separately insured.

Q8 What is a single ownership account?

A single (or individual) ownership account is an account owned by one person. Such accounts include those in the owner’s name; those established for the benefit of the owner by agents, nominees, guardians, custodians, or conservators; and those established by a business that is a sole proprietorship.

Q9 Are deposits in different banks separately insured?

Yes. If you have deposits with more than one bank, deposit insurance coverage limit is applied separately to the deposits in each bank.
Sri [February 16th, 2008]:

Folks,

try out above website, it’s great for getting the latest fixed deposit rates, loan (home, personal, vehicle) rates and tax savings options. you have options to compare rates using different criteria.

-Sri
ks [May 5th, 2008]:

Mumbhai,

thats the problem in India - all these rules are very old and so is this insurance amount on FDs. In north america, is $100,000 so here is its Rupees 100,000. Silly, isn’t it ? I wish there was a way (paid) to increase the insurance limit.

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A Blog about Indian Capital Markets, by Kaushik Gala.

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