Tax Saving Fixed Deposits one of the most popular way to save taxes u/s 80C of income tax. These are like normal Fixed Deposit with banks but is labeled as “Tax Saving FD” while making the deposit.
Contents
Why you Should Invest?
- Convenient to invest. ICICI Bank, SBI, HDFC Bank, etc offers online facility for Tax Saving FD
- Redemption on maturity comes directly to your bank account
- High Safety – FD up to Rs 1 Lakh is insured
Why you Should Not Invest?
- There are lot of competing products like EPF, PPF, ELSS to exaust the investment of Rs 1.5 Lakh u/s 80C
- The interest earned is taxable
- Cannot be withdrawn prematurely
- Cannot be pledged to secure loan or as security
Also Read: Best Tax Saving Investments u/s 80C
Tax Saving Fixed Deposit Interest Rate
As of February 8, 2020 banks are offering 5.25% – 7.50% for general public and 5.750% – 8.00% for Senior Citizens.
- The best Tax Saving Fixed Deposit Interest offered is 7.50% for General Public by DCB Bank
- The best Senior citizens Tax Saving Fixed Deposit Interest offered is 8.00% by DCB Bank
- 5 Year NSC at Post Office gives 7.9% interest for both Senior Citizens and general public
The table below lists the banks in alphabetical order with their respective interest rate offer on Tax Saving FDs for General and Senior Citizens.
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The highest Interest Rates have been highlighted:
| Bank | General | Senior Citizen | Scheme Name |
| Allahabad Bank | 6.50% | 6.50% | Allahabad Bank Tax Benefit Term Deposit Scheme |
| Andhra Bank | 6.10% | 6.60% | AB Tax Saver Deposits |
| Axis Bank | 6.50% | 7.00% | Axis Bank Tax Saver Deposits |
| Bandhan Bank | 6.75% | 7.25% | Bandhan Bank Tax Saver FD |
| Bank of Baroda | 6.10% | 6.60% | Baroda Tax Savings Term Deposit |
| Bank of India | 6.25% | 6.75% | Star Sunidhi Tax-Saving Deposit Scheme |
| Bank of Maharashtra | 5.50% | 6.00% | Bank of Maharashtra Tax Saver FD |
| Canara Bank | 6.25% | 6.75% | Canara Tax Saver Scheme |
| Catholic Syrian Bank | 6.25% | 6.75% | CSB Tax Savings Support |
| Central Bank of India | 6.20% | 6.70% | CENT Tax Saving Deposit |
| Citibank | 5.25% | 5.75% | Citibank Tax Saver Deposit |
| City Union Bank | 6.60% | 6.60% | CUB Tax Saver Gold Deposit |
| Corporation Bank | 6.35% | 6.85% | Corp Tax Saver |
| DCB Bank | 7.50% | 8.00% | DCB Bank Tax Saver FD |
| Dhanalakshmi Bank | 6.50% | 6.50% | Dhanam Tax Advantage Deposit |
| Federal Bank | 6.50% | 7.00% | Federal Tax Savings Deposit |
| HDFC Bank | 6.30% | 6.80% | HDFC Bank Tax Saver FD |
| ICICI Bank | 6.40% | 6.90% | ICICI Bank Tax Saver FD |
| IDBI Bank | 6.25% | 6.75% | ICICI Bank Tax Saver FD |
| IDFC First Bank | 7.25% | 7.75% | Suvidha Tax Saving Fixed Deposits |
| Indian Bank | 6.25% | 6.75% | IB Tax Saver schemes |
| Indian Overseas Bank | 6.25% | 6.75% | IOB Tax Saver Deposit Scheme |
| Indus Ind Bank | 6.75% | 7.25% | Indus Tax Saver Scheme |
| J&K Bank | 6.00% | 6.50% | Tax Saver Term Deposit Scheme |
| Karnataka Bank | 6.50% | 6.90% | KBL – Tax Planner |
| Karur Vysya Bank | 6.75% | 6.75% | KVB – Tax Shield Deposits |
| Kotak Mahindra Bank | 5.90% | 6.40% | Tax Saving Deposits |
| Lakshmi Vilas Bank | 7.25% | 7.85% | Lakshmi Tax Saver Deposits |
| Oriental Bank of Commerce | 6.25% | 6.75% | Oriental Bank Tax Saving Term Deposit |
| Post Office FD (5 Years) | 7.70% | 7.70% | 5-Year Post Office Time Deposit |
| Post Office NSC (5 Years) | 7.90% | 7.90% | National Saving Certificate |
| Punjab and Sind Bank | 6.45% | 6.95% | PSB Fixed Deposit Tax-Saver Scheme |
| Punjab National Bank | 6.30% | 6.80% | PNB Tax Saver Fixed Deposit Scheme |
| Ratnakar Bank | 7.35% | 7.85% | Ratna Tax Saving Scheme |
| South Indian Bank | 6.50% | 7.00% | SIB Tax Gain 2006 |
| State Bank of India | 6.00% | 6.50% | SBI Tax Savings Scheme 2006 (SBITSS) |
| Syndicate Bank | 6.25% | 6.75% | SyndTaxShield Deposit Scheme |
| Tamilnad Mercantile Bank | 6.60% | 7.10% | TMB TSD (Mullai) |
| UCO Bank | 6.25% | 6.75% | UCO Tax Saver Deposit Scheme – 2006 |
| Union Bank of India | 6.30% | 6.80% | Union Tax Saver |
| United Bank of India | 6.00% | 6.50% | United Bank of India Tax Saver FD |
| Yes Bank | 7.25% | 7.75% | Yes Bank Tax Saver FD |
Source: Bank Websites Last Updated: February 8, 2020
Taxation & TDS – Tax Saving Fixed Deposits:
The interest received on tax Saving Fixed Deposit is fully taxable. The interest income is considered as “income from other sources” for Tax filing and taxed at marginal tax rates applicable.
TDS (Tax deduction at source) at the rate of 10% is deducted, if the interest income is more than Rs 40,000 in financial year per bank (changed from Rs 10,000 limit in Budget 2019)
In case of Senior citizens TDS would be deducted at the rate fo 10%, if the interest income exceeds Rs 50,000. You can see the same in Form 26AS.
In case your income does not exceed taxable slab and so want to avoid TDS, you can submit Form 15G or 15H when making the deposit. You would also need to submit the form at the start of every financial year to the concerned bank branch.
Helpful Posts on Fixed Deposits
Which bank offers Highest Interest Rate on Bank FD?
13 Most Important things to know before investing in Bank Fixed Deposits
Section 80TTB: Senior Citizens can Save Tax on their Interest Income
TDS threshold on Bank FD increased to Rs 40,000 from April 1, 2019
Avoid TDS: fill Form 15G and 15H
Small Bank FDs offer interest up to 9% – Should you invest?
How SWP in Debt Funds generate higher returns than FD
How to increase bank deposit insurance through Joint accounts?
How Safe is Your Fixed Deposit in Bank?
How you loose Money in Fixed Deposits?
Fixed Deposits that you can use to save Tax
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7 High Rated Companies Offering more than Bank Fixed Deposits
Key Points – Tax Saving FD:
Below are some of points to keep in mind while investing in Tax Saving Deposits:
- As the Tax Saving FD scheme was introduced in Budget of 2006, it’s also known as Tax Saving Deposit scheme 2006 (Notification Number 203/2006 and SO1220 (E) dated 28/07/2006)
- Most of the banks accept deposit of 5 Years only. However there are banks with deposit tenures of more than 5 Years
- You can deposit on either Single or Joint name. However benefit of tax deduction is available for first holder only.
- Most banks offer interest rate which is similar to their 5 years term deposits. Only a few banks give slightly higher interest rate for their Tax Saving Fixed Deposits
- Most banks give Senior citizens and their staff members additional interest of 0.25% to 0.5%
- Depositor can opt for either cumulative or non-cumulative way of crediting periodical interest
- Don’t be mislead by banks advertisements about their yield on Tax Saving FDs. Those are manipulative calculations
- Be cautious of small co-operative banks as they have higher risk than bigger private and public sector banks
- Depositor gets benefit U/s.80C of the Income Tax Act. 1961
- Minimum deposit is Rs.100 and in multiples thereof
- Maximum deposit in a Financial Year Rs.1,50,000/- [i.e., 1st April to 31st March of the following calendar year]
- Deposits cannot be withdrawn prematurely
- Deposits cannot be pledged to secure loan or as security
Disclaimer: We have tried to keep interest rates up to date, but as these change frequently you are advised to check with the bank before investing. Also it would be great if you can point out any errors through comments or email!
Related posts:
Highest Interest Rate on Bank Fixed Deposits (FD) – February 2020 
Best NRE Fixed Deposit Interest Rates for NRIs – February 2020 
Best FCNR Deposit Rates for HKD (Hong Kong NRIs) – February 2020 
7 High Rated Companies Offering more than Bank Fixed Deposits – February 2020 
Best FCNR Deposit Rates for SGD (Singapore NRIs) – February 2020
Hi Amit,
Kindly also include EASF bank in this list.
I earned an interest of Rs. 72000?- (approximate) from a Senior Citizen Tax Savings Deposit for Rs. 15,00,000/-in SBI. Will I have to pay tax for this interest? Please replyr me through my mail
Hello sir i have kept rs 150000 as a tax saving fixed deposit for 5years in online banking app of Indus bank that is the maximum amount for a single account.. But after some days i have kept another 150000 rs in another FD of tax saving Both accounts are in the same bank only . Is it OK for tax exemption from both accounts or it is available from single account only..
you can keep in one bank – no issues!
according to this IDFC is the best bank but sir it has very less branches
Invest for 5 years n show only in current financial yr for tax rebate. Is there long term plan for tax rebate?
Also plz let me knw if I get any proof from the bank online or physical which I can submit as an investment proof in my office!! Thanks in advance.
Online proof should be good until stated otherwise from your office.
Hi.. can I take tax saving FD online as I don’t have cheque or cash in hand. I have to submit the proof in my ofc by Jan 15 – 2017!! Please advice..I have icici bank saving a/c!
Yes you can do online FD in ICICI. Make sure you choose “Tax Saving”. Take a print out and submit in office.
FD & RD are also part of the tax deduction?
Only 5 years or more FD with clearly labeled as “Tax Saving” are eligible for tax deduction u/s 80C