Best Tax Saving Bank Fixed DepositsAccording to a research conducted by the RBI in March 2020, 52% of Indians preferred investing in bank deposits, which is not surprising considering the value of bank deposits had increased by 10.1% in 2019. Majority of Indians are still risk-averse and would prefer investment options which would guarantee the safety of capital alongside interest income like a bank deposit. But since TDS was applicable on bank deposits, they had started losing their charm for the Indian investors. This is when banks introduced Tax Saving Fixed Deposits. Tax saving fixed deposit is one of the best tax saving options for salaried individuals as these provide dual benefits:
- Safety of capital and interest income
- Investment in tax saving bank fixed deposits can be claimed as deduction upto Rs 1.5 Lakhs under section 80C of Income Tax Act,1961.
- Key features of tax saving fixed deposit.
- Who can invest in tax saving fixed deposits?
- Top 5 banks that provide tax saving fixed deposits.
- Best tax saving Fixed Deposit rates for you.
Key Features of Tax Saving Fixed Deposit
- Tax exemption upto Rs. 1.5 lac under section 80C of Income Tax Act, 1961.
- Long-term tenure of 5 years to 10 years.
- Premature withdrawal allowed after a 5 year lock-in period.
- Interest rates to Senior citizens - additional 0.50% interest .
Who can invest in Tax Saving Fixed Deposit?Only Indian resident individuals and Hindu Undivided Families (HUFs) can invest in Tax saving FDs. It can be held either in individual names or joint names. Note: Tax saving exemption will only be available for the primary account holder. Let us now look at some of the top banks which provide tax saving Fixed deposits with high interest rates.
Top 5 Banks Providing Best Tax Saving Fixed Deposits
State Bank of India - SBI Tax Saving Fixed DepositsSBI tax saving FD offers an interest rate of 5.40% for regular accounts and 6.20% for senior citizen accounts. It has a lock-in period of 5 years post which you can withdraw your money i.e. principal amount + interest. The minimum deposit for tax saving FD offered by SBI is Rs. 1000 and maximum amount for deposit is Rs. 1.5 Lakh.
HDFC Bank - HDFC Tax Saving Fixed DepositsHDFC tax saving fixed deposit offers an interest rate of 5.50% for regular accounts and 6.25% for senior citizen accounts. It has a lock-in period of 5 years and you can avail tax benefits as per section 80C of Income Tax Act.The minimum deposit for tax saving FD is Rs. 100 and maximum amount for deposit is Rs. 1.5 Lakh under your tax slab.
ICICI Bank - ICICI Tax Saving Fixed DepositsICICI bank offers two types of tax saving FDs. Either you can opt for a traditional plan or a reinvestment plan.
- The traditional plan offers monthly or quarterly payout options.
- Reinvestment plan pays quarterly compounded interest that is reinvested with the principal amount.
Kotak Mahindra Bank - Kotak Mahindra Bank Tax Saving Fixed DepositsKotak Bank offers an interest rate of 4.90% for regular accounts and 5.40% for senior citizens accounts. The lock-in period is of 5 years with a minimum deposit of Rs. 100 and a maximum of Rs. 1.5 Lakh.
Axis Bank - Axis Bank Tax Saving Fixed DepositsThe tax saving fixed deposits of Axis Bank comes with a tenure of 5 years. It offers an interest rate of 5.50% for general accounts and 6.05% for senior citizen accounts. The interest is paid every month or every quarter as per the selected option.
Best Tax Saving Fixed Deposits with High Interest Rates in India
|Banks||Interest rates forregular account||Interest rates for Senior citizen account|
|SBI Tax Saving Scheme||5.40%||6.20%|
|HDFC Bank 5 Year Tax Saving Fixed Deposit||5.50%||6.25%|
|Axis Bank Tax Saver Fixed Deposit||5.50%||6.05%|
|Kotak Bank Tax Saving Fixed Deposit||4.90%||5.40%|
|ICICI Bank Tax Saving Fixed Deposit||5.50%||6.30%|
|Bank of Baroda Tax Savings Term Deposit||5.30%||5.80%|
|IDBI Bank Suvidha Tax Saving Fixed Deposit||5.10%||5.60%|
|Citibank Tax Saver Deposits||3.75%||4.25%|
|Bajaj Finance Tax Saving Fixed Deposit||6.60%||6.85%|
|Ujjivan Small Finance Bank Tax Saver Fixed Deposits||6.50%||7%|
|AU Small Finance Bank 5 Years Tax Saving Fixed Deposit||6.75%||7.25%|