Bank Fixed Deposit - STDR (Cumulative)

This page provides all the details you need to know about the Bank Fixed Deposit - STDR scheme.

Table of Contents

 

What is STDR?

STDR stands for Special Term Deposit Receipt.

STDR is a type of Fixed Deposit where the interest will be compounded on a quarterly basis.

This scheme is also known as Interest Re-investment or Cumulative option.

This scheme is suitable for those who expect to receive a compounded amount at the end of the tenure.

 

How does STDR work?

  • Deposit a lump sum amount for specific tenure

  • At the end of the tenure, you will get the maturity amount (deposit amount + interest earned)

 

Features

  • Safe investment option

  • Guaranteed returns

  • Quarterly compounded interest

  • Senior Citizens get extra interest rate compared to other customers

 

Income Tax Benefits

Effective 01-Apr-2020, the income tax benefits will depend upon whether you choose old tax system or new tax system.

Old Tax System:

Deposit amount (up to Rs. 1.5 Lakhs) under 5 years Tax Saving FD will qualify for tax deduction under Section 80C of Income Tax Act.

No tax deduction benefits for deposit other than 5 years Tax Saving FD.

There is a TDS (Tax Deducted at Source) from Bank if the interest received is more than Rs. 40,000 in a financial year. This is for ordinary citizens. The new TDS limit of Rs. 40,000 is from 01-Apr-2019 onwards. Earlier, the limit was Rs. 10,000.

For Senior Citizens, TDS limit is Rs. 50,000 from 01-Apr-2018 onwards. Earlier, the limit was Rs. 10,000.

Bank will provide TDS certificate for the tax deducted.

Interest received is taxable. You need to declare the interest income under "Income from other sources" during tax returns and pay the income tax as per your income tax slab.

Depending upon the term of STDR, you can choose to pay tax on interest either on maturity or every financial year.

 

New Tax System:

No income tax benefits. The deposit amount won't get any deduction benefit under Section 80C of Income Tax Act.

There is a TDS (Tax Deducted at Source) from Bank if the interest received is more than Rs. 40,000 in a financial year. This is for ordinary citizens. The new TDS limit of Rs. 40,000 is from 01-Apr-2019 onwards. Earlier, the limit was Rs. 10,000.

For Senior Citizens, TDS limit is Rs. 50,000 from 01-Apr-2018 onwards. Earlier, the limit was Rs. 10,000.

Bank will provide TDS certificate for the tax deducted.

Interest received is taxable. You need to declare the interest income under "Income from other sources" during tax returns and pay the income tax as per your income tax slab.

Depending upon the term of STDR, you can choose to pay tax on interest either on maturity or every financial year.

 

Who can open the account?

  • Resident individual can create an account for himself

  • Joint account can be created by 2 or more individuals

 

How do you open the account?

  • Account can be opened by Cash or Cheque

  • Date of realisation of cheque will be the date of account opening

  • If you have a Savings Account, then you can create STDR from Savings Account funds

 

Deposit Limits

  • Minimum Deposit amount is Rs. 1,000/-

  • No maximum limit on deposit amount

 

Term

You can choose the Term from 6 Months to 10 Years.

  • Minimum Term : 6 Months

  • Maximum Term : 10 years

Quite a few Banks offer terms up to 20 years.

 

Interest Rate (%)

Interest rate (on the day of account opening) will remain the same throughout the tenure of STDR. It will not change even if there are changes to the interest rate thereafter.

The interest rate (%) varies depending upon on the period of deposit.

The interest rate (%) varies from one Bank to another Bank. Check with your Bank for the latest interest rate.

 

Compounding Frequency

Quarterly compounding frequency is followed in this scheme.

 

Interest Credit Method

You will receive interest amount upon maturity of the scheme (along with the deposit amount).

 

Auto-Renewal Facility

If you do not provide any specific instructions, then the STDR account will be renewed automatically upon maturity.

It will be renewed for the same period for which it was opened initially.

The interest rate for the renewed period will be the interest rate on the day of maturity.

 

Pre-Mature Closure

Premature closure of STDR account is possible. But, there will be penalty for doing so.

The penalty amount is generally 1% of the interest earned.

Interest will be payable for the duration for which the STDR account was kept minus the penalty amount.

The penalty amount may change from time to time.

 

Loan Facility

Loan facility is available up to 90% of the deposit amount plus accrued interest.

 

Account Conversions

You can convert a STDR (cumulative interest payout) account to a TDR (regular interest payout) account and vice versa.

 

Account Transfer

STDR accounts can be transferred from one branch to another branch free of cost.

 

Nomination Facility

Nomination facility is available.

You can nominate either at the time of account opening or after opening the account (but before maturity).

 

NRI

NRI (Non Resident Indians) can not open residential fixed deposits. But, they can open NRI Fixed Deposit and it is a different scheme altogether.