The Tamilnad Mercantile Bank, which began its operations in 1921, is one of the major scheduled commercial banks in South India. The business mix of Tamilnad Mercantile Bank stood at Rs.44,985.81 crores last year, registering a growth of 13.06% on a y-o-y basis. As on February 2016, the Tamilnad Mercantile Bank has deposits of around Rs.25,650 crores and advances amounting to Rs.19,336 crores.
Tax Saving Instruments offered by Tamilnad Mercantile Bank:
The Tamilnad Mercantile Bank offers several products such as home loans, educational loans, tax saver fixed deposits and mutual funds.
Tax Benefits of Tamilnad Mercantile Bank Tax Saving Fixed Deposit Schemes:
The Tamilnad Mercantile Bank offers two tax saving fixed deposit schemes known as ‘Malligai’ and ‘Mullai’. The tax saving fixed deposit schemes qualify for deductions under Section 80C of the Income Tax Act, 1961 (from AY 2007-08). Individuals and HUF are eligible for deduction up to Rs.1.5 lakh for a five-year period or above. It is important to note that only the first holder of the fixed deposit account can avail of the tax benefit. Under the ‘Mullai’ fixed deposit scheme, you will be paid cumulative interest upon maturity of the scheme. Under the ‘Malligai’ fixed deposit scheme, you can withdraw the interest earned on a monthly, half-yearly, quarterly and annual basis.
Features of Tamilnad Mercantile Bank Tax Saving Fixed Deposit Schemes:
The salient features of the deposit schemes are as follows:
- Eligibility: Members of Hindu Undivided Family (HUF) and all individuals can avail of this scheme. Submission of PAN numbers is mandatory
- Interest Rate: The Tamilnad Mercantile Bank offers an interest rate of 7.80% on this scheme. Also, senior citizens can avail of an additional interest of 0.5% above the interest rate offered for regular depositors
- Withdrawal Options: You can withdraw your interest earned on a monthly, half-yearly, quarterly and annual basis
- Payment Options: You will receive cumulative interest upon maturity of the deposit scheme
- Joint Account: The Tamilnad Mercantile Bank allows joint accounts for tax saver fixed deposit schemes
- Duration: The Malligai fixed deposit scheme is offered for a period ranging from 5 years to 10 years
- Amount: The minimum amount which can be deposited is Rs.100 while the maximum amount is Rs.1,50,000
- Transfer: The deposit under this scheme is not transferable
- Premature Closure: Not allowed under this scheme
- Nomination Facility: In the unfortunate event of your death, your nominee can receive the amount before or after the maturity of the scheme
- Loan Facility: Not permitted under this scheme
Tax Benefits of Tamilnad Mercantile Bank Home Loan:
You can claim a deduction of up to Rs.1.5 lakh on the interest payable for the purchase of a new property under section 24(b) of the Income Tax Act, 1961. The interest which needs to be paid during the construction period can be divided into 5 instalments in a year starting from the specific year in which you constructed or bought your house. Under section 24(b), you can claim deduction on interest on home loan for construction, renewal and purchase of house property. Also, according to sections 80C and section 80CCE of the Income Tax Act, 1961, you can claim a deduction of up to Rs.1 lakh (principal repayment) on your home loan from your gross total income. For instance, if your taxable income is Rs.6,00,000, principal repayment is Rs.1,20,000 and the interest payable is Rs.1,70,000, you can claim a total deduction of Rs.2.5 lakh. Consequently, your taxable income will be Rs.3.5 lakh.
Features of Tamilnad Mercantile Bank Home Loan:
You can avail of various tax benefits on home loans offered by the Tamilnad Mercantile Bank. The salient features of the home loan are as follows:
- Amount: You can get up to Rs.300 lakhs as loan for buying a new house and Rs.25 lakhs for renovation of your house.
- Eligibility: The minimum age is 18 years while the maximum is 50 years. The upper age limit may be increased to 60 years for professionals such as doctors, lawyers and chartered accountants among others.
- Repayment: The maximum repayment period is 25 years. The EMIs should not be above 50% of the take home salary for salaried persons
- Interest Rate: The interest rate offered is 10.90% p.a for loans above Rs.30 lakhs. The Tamilnad Mercantile Bank offers an interest rate of 10.65% p.a for loans up to 15 years and 10.90% p.a for a period of 30 years for Rs.30 lakhs
- Guarantee: Third party, father or spouse of an applicant and male members in case of HUF can act as guarantors
Tax Benefits of Tamilnad Mercantile Bank Educational Loan:
The Tamilnad Mercantile Bank Educational Loan offers educational loans to students for higher education. You can claim deduction under Section 80E of the Income Tax Act, 1961 for the repayment of interest on your educational loan. You can avail of the deduction only if you have taken the loan for higher education of your spouse/children/self. It is important to note that only the interest on education loan can be claimed by you as deduction. There is no maximum limit for deduction as per Section 80E of the IT Act. You can claim deduction from the year you start paying interest on your educational loan.
Features of Tamilnad Mercantile Bank Educational Loan:
The salient features of the educational loan are as follows:
- Coverage: Several expenses such as tuition fees, lab fees, purchase of equipment, travel expenses, study tours and so forth are covered
- Security: No security is required for loan amount up to Rs.4 lakh while a third party guarantee is required for loan amount above Rs.4 lakhs and below Rs.7.5 lakh
- Eligibility: All Indian nationals above 18 years of age are eligible
- Loan Amount: The maximum loan amount offered is Rs.10 lakhs for higher studies in India and Rs.20 lakhs for studies abroad
- Interest Rate: The Tamilnad Mercantile Bank offers an interest rate of 13.90% p.a for loans up to Rs.4 lakhs and 13.40% p.a for loans up to Rs.20 lakhs
Tax Benefits of Tamilnad Mercantile Bank Mutual Funds:
The Tamilnad Mercantile Bank has entered into partnerships with various Asset Management Companies such as Sundaram Mutual Fund, Birla Sun Life Mutual Fund, UTI Mutual Fund, Reliance Mutual Fund, HDFC Asset Management Company Limited, Franklin Templeton Mutual Fund and ICICI Prudential AMC Mutual Fund. ELSS funds offered by the said companies offer various tax benefits as per section 80C of the Income Tax Act. ELSS funds offer capital appreciation along with tax benefits (no tax is applicable on long-term capital gains).