Tax Saving FD (Fixed Deposits) is 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
- 1 Tax Saving FD: Advantages
- 2 Tax Saving FD: Disadvantages
- 3 Tax Saving FD Interest Rate
- 4 Taxation & TDS – Tax Saving Fixed Deposits:
- 5 Helpful Posts on Fixed Deposits
- 6 Key Points – Tax Saving FD
- 7 Tax Saving FD FAQs
- 7.1 ✅What is the best tax saving FD interest rate?
- 7.2 ✅What is the maturity period for tax saving Fixed Deposit scheme?
- 7.3 ✅Can I open joint tax saving FD account?
- 7.4 ✅How is tax saving FD taxed?
- 7.5 ✅Can I get loan on tax saving FD?
- 7.6 ✅Is tax saving FD safe?
- 7.7 ✅What is the minimum and maximum investment limit for tax saving FD?
- 7.8 ✅What is the interest rate on SBI tax saving FD?
- 7.9 ✅What is the interest rate on ICICI tax saving FD?
- 7.10 ✅What is the interest rate on HDFC tax saving FD?
- 7.11 ✅What is the interest rate on Axis tax saving FD?
- 7.12 ✅What is the interest rate on Post Office tax saving FD?
Tax Saving FD: Advantages
Following reasons make Tax Saving fixed deposit attractive to investors;
- 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 5 Lakh is insured
Tax Saving FD: Disadvantages
- 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- Cannot be withdrawn prematurely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
Tax Saving FD Interest Rate
As of June 1, 2021 banks are offering 4.00% – 7.25% for general public and 4.50% – 7.75% for Senior Citizens.
- The best Tax Saving Fixed Deposit Interest offered is 7.25% for General Public by Suryoday Small Finance Bank and 6.50% by DCB Bank, Indus Ind Bank & Ratnakar Bank
- The best Senior citizens Tax Saving Fixed Deposit Interest offered is 7.75% by Suryoday Small Finance Bank and 7.25% by Yes Bank
- 5 Year NSC at Post Office gives 6.8% interest for both Senior Citizens and general public
Best Investment to Save Tax
Section 80C offers more than 10 investments where you can invest to save tax, However many a times you need not actually do this investment as its already covered due to expenses like children tuition fee or automatic EPF deduction for salaried. In case you are new to taxes and investment do read our helpful guide on How to take maximum advantage of Section 80C and choose the best investment to save tax.
The table below lists the banks in alphabetical order with their respective interest rate offer on Tax Saving FDs for General and Senior Citizens. The highest Interest Rates have been highlighted:
| Bank | Type of Bank | General Public | Senior Citizens | Scheme Name |
|---|---|---|---|---|
| Axis Bank | Private | 5.75% | 6.50% | Axis Bank Tax Saver Deposits |
| Bandhan Bank | Private | 5.50% | 6.25% | Bandhan Bank Tax Saver FD |
| Bank of Baroda | Government | 5.25% | 6.25% | Baroda Tax Savings Term Deposit |
| Bank of India | Government | 5.30% | 5.80% | Star Sunidhi Tax-Saving Deposit Scheme |
| Bank of Maharashtra | Government | 4.90% | 5.40% | Bank of Maharashtra Tax Saver FD |
| Canara Bank | Government | 5.50% | 6.00% | Canara Tax Saver Scheme |
| Catholic Syrian Bank | Private | 5.75% | 6.25% | CSB Tax Savings Support |
| Central Bank of India | Government | 5.10% | 5.60% | CENT Tax Saving Deposit |
| Citibank | Foreign | 3.50% | 4.00% | Citibank Tax Saver Deposit |
| City Union Bank | Private | 6.00% | 6.00% | CUB Tax Saver Gold Deposit |
| DCB Bank | Private | 6.50% | 7.00% | DCB Bank Tax Saver FD |
| Dhanalakshmi Bank | Private | 5.60% | 5.60% | Dhanam Tax Advantage Deposit |
| Federal Bank | Private | 5.50% | 6.00% | Federal Tax Savings Deposit |
| HDFC Bank | Private | 5.30% | 5.80% | HDFC Bank Tax Saver FD |
| ICICI Bank | Private | 5.35% | 5.85% | ICICI Bank Tax Saver FD |
| IDBI Bank | Private | 5.25% | 5.75% | IDBI Bank Tax Saver FD |
| IDFC First Bank | Private | 5.75% | 6.25% | Suvidha Tax Saving Fixed Deposits |
| Indian Bank | Government | 5.25% | 5.75% | IB Tax Saver schemes |
| Indian Overseas Bank | Government | 5.20% | 5.70% | IOB Tax Saver Deposit Scheme |
| Indus Ind Bank | Private | 6.50% | 7.00% | Indus Tax Saver Scheme |
| J&K Bank | Government | 5.30% | 5.80% | Tax Saver Term Deposit Scheme |
| Karnataka Bank | Private | 5.50% | 5.90% | KBL – Tax Planner |
| Karur Vysya Bank | Private | 6.00% | 6.00% | KVB – Tax Shield Deposits |
| Kotak Mahindra Bank | Private | 5.30% | 5.80% | Tax Saving Deposits |
| Nainital Bank | Private | 6.35% | 6.35% | Nainital Bank Tax Saver FD |
| North East Small Finance Bank | Small Bank | 6.50% | 7.00% | North East Bank Tax Saver FD |
| Post Office FD (5 Years) | Post Office | 6.70% | 6.70% | 5-Year Post Office Time Deposit |
| Post Office NSC (5 Years) | Post Office | 6.80% | 6.80% | National Saving Certificate |
| Punjab and Sind Bank | Government | 5.25% | 5.75% | PSB Fixed Deposit Tax-Saver Scheme |
| Punjab National Bank | Government | 5.30% | 5.80% | PNB Tax Saver Fixed Deposit Scheme |
| Ratnakar Bank | Private | 6.60% | 7.10% | Ratna Tax Saving Scheme |
| South Indian Bank | Private | 5.65% | 6.15% | SIB Tax Gain 2006 |
| State Bank of India | Government | 5.40% | 6.20% | SBI Tax Savings Scheme 2006 (SBITSS) |
| Suryoday Small Finance Bank | Small Bank | 7.25% | 7.75% | Suryoday Bank Tax Saver FD |
| Tamilnad Mercantile Bank | Private | 5.50% | 6.00% | TMB TSD (Mullai) |
| UCO Bank | Government | 5.00% | 5.50% | UCO Tax Saver Deposit Scheme – 2006 |
| Union Bank of India | Government | 5.55% | 6.05% | Union Tax Saver |
| Utkarsh Small Finance Bank | Small Bank | 6.75% | 7.25% | Utkarsh Bank Tax Saver FD |
| Yes Bank | Private | 6.75% | 7.25% | Yes Bank Tax Saver FD |
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 PAN is not submitted to the bank, the TDS rate is 20%.
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.
Get Highest Fixed Deposit Interest Rates
Fixed Deposit with Banks is one of the most popular and convenient investment option. To help you choose the best, we compare the interest rates on fixed deposit across all major 48 banks in India including government, private, foreign and small financial banks in India every month. This may prove to be quite handy for you in choose the Best Bank FD scheme.
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
- Fixed Deposits for NRIs
- Highest Interest Rate on Recurring Deposits
- Understanding Compounding and Yield in Fixed Deposit
- How to get Credit card against Fixed Deposit?
- 7 High Rated Companies Offering more than Bank Fixed Deposits
- All about Post Office FD Schemes
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 0.75%
- 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
How much Taxes you Need to Pay this Year? Download Our Income Tax Calculator to Know your Numbers
Do you know how much tax you need to pay for the year? Have you taken benefit of all tax saving rules and investments? Should you use the “NEW” tax regime or continue with the old one? In case you have all these questions just Download the Free Excel Income Tax Calculator for FY 2021-22 (AY 2022-23) and get your answers.
Tax Saving FD FAQs
✅What is the best tax saving FD interest rate?
The best Tax Saving Fixed Deposit Interest offered is 7.25% for General Public by Suryoday Small Finance Bank and 6.75% by DCB Bank
The best Senior citizens Tax Saving Fixed Deposit Interest offered is 7.75% by Suryoday Small Finance Bank and 7.25% by DCB Bank and Yes Bank
✅What is the maturity period for tax saving Fixed Deposit scheme?
The maturity period for tax saving fixed deposit scheme is 5 years.
✅Can I open joint tax saving FD account?
Yes you can open joint account. However only the primary holder (or the first holder) can claim the tax benefit. Also any tax payable on interest is responsibility of primary holder.
✅How is tax saving FD taxed?
The interest received on tax saving fixed deposit is taxable as per income tax slab. However, Senior citizens have Rs 50,000 exemption u/s 80TTB on income from interest.
✅Can I get loan on tax saving FD?
You cannot take loan against tax saving FD.
✅Is tax saving FD safe?
Generally speaking all bank FDs are safe as banks are rigorously monitored by RBI. The FD in Government owned banks like SBI, PNB are the safest. This is because government would intervene and pay the depositors. Next is big private banks like ICICI & HDFC followed by smaller private banks. After this we have small finance banks. Co-operative banks are worst of the lot and I would not trust them with my money. So until there are compelling circumstances keep away from co-operative banks. You can learn from recent example where Yes Bank was rescued by the government and no depositors suffered. However depositors of PMC Bank (a co-operative bank) are still suffering. You can learn more about this in our detailed article about How safe is your Bank Fixed Deposit?
✅What is the minimum and maximum investment limit for tax saving FD?
The minimum investment amount is Rs 100 and the maximum investment limit is Rs 1.5 Lakhs.
✅What is the interest rate on SBI tax saving FD?
SBI tax saving FD offers 5.4% interest to general public and 6.2% for senior citizens.
✅What is the interest rate on ICICI tax saving FD?
ICICI tax saving FD offers 5.35% interest to general public and 5.85% for senior citizens.
✅What is the interest rate on HDFC tax saving FD?
HDFC tax saving FD offers 5.3% interest to general public and 5.8% for senior citizens.
✅What is the interest rate on Axis tax saving FD?
Axis tax saving FD offers 5.75% interest to general public and 6.50% for senior citizens.
✅What is the interest rate on Post Office tax saving FD?
Post Office 5 year Time Deposit is eligible for tax saving. The present interest rate is 6.7% for both general public and senior citizens. Additionally you can also opt for 5 year NSC which is offering 6.8% interest rate.
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!
What I s the best tax free investment for sr.citizens. returns may be 6-7%. There shall not be any tax liability.
You can buy Tax free bonds from secondary market. For other options you can go through following post – 13 Investments to Generate Regular Income
Hi Amit
Thanks for such a great post. Which product PPF or fixed deposit, should i choose for tax benefit? Please suggest.
the Pros and cons have been listed in the post. Its your money – make an educated choice!
Hi, which is the best avenue to park around 1.5 lac rupess for 16 months and get best return?
You can choose between Fixed Deposit (assured return but taxed at slab rate), debt mutual fund (comparable to FD returns and taxed at slab rate) or arbitrage mutual fund (slightly lower to FD rates but tax free returns).
In case you are in lower tax bracket go for Fixed Deposit and if higher tax bracket go for Arbitrage Funds.
I want to invest 1.5lac so please guide me for better option. Both in terms of tax saving and return as well.
I think this would help you – Best Tax Saving Investments u/s 80C
Hi
I want to know whether tax saving FD can be breaked after 5 months or 1 year. If yes what will be the amount returned. For example If i invest 1lakh what will be the amount refunded.
The tax saving fixed deposit cannot be withdrawn prematurely. Only in cases where the deposit was made for more than 5 years, you can withdraw after completion of 5 years.
GM AMIT.. I would like to invest Rs.50000/- for Tax saving. Which one is best option. SBI Magnum mutual fund or FD in ICICI bank ?
ELSS (Tax saving mutual fund) and tax saving FD are at two extremes. The decision of what to invest depends on your risk taking ability, your present portfolio, usage of funds on maturity, investment duration among other things. ELSS are more volatile, may give you negative returns but is tax free on maturity. FD on the other hand have assured returns and is taxable. So choose wisely. I had compared all the tax saving options available u/s 80C in other post – it might help.
SIR, I WANT TO DEPOSIT AN AMOUNT AS FD (MIS SCHEME) TUNE OF AMOUNT 5 LAKH AND ABOVE IN RBL BANK LTD OR DHFL (CARE AAA, BWR AAA RATING ) FOR LONG TERM . SIR PLZ YOU RECOMEND WHICH WILL BE BETTER? MY MOBILE NO 9830334787
Both RBL and DHFL are good options. You should compare the features important to you. Opening & managing account with RBL would be easier than DHFL. Also check penalty for premature withdrawal in both cases. DHFL might have higher penalty. You can opt for either of the two or divide the money among the two depending on your comfort level.
Good. Keep it up. Right now this is the only site that updates comparative FD rates regularly.
Thank you 🙂
Very nice guide path.
Thanks you – share with your friends, will help them too 🙂
Nice info
Good information.
Check out repco bank for south indians.. they offer 9% for senior citizens…
http://repcobank.com/rate_of_interest.php
Go for it as very few banks are offering 9%
Now a days best FDR Rate gives New India Cop Op Bank its 10% for 27 Months for RD also same
Cooperative banks in general offer higher interest rates but are more risky. You should limit all your deposits to not more than Rs 1 lakh in each co-operative bank. As in case of any default you can get your money back from insurance.
nice
I will be retiring from a pvt company . I will not get any pension. I would like to have monthly income. Can you pl suggest how I should invest so that I will get regular monthly income. Also how can I save tax. You can take example of Rs 1000000/- How it should be invested in various schemes to have a regular monthly income.
I had compiled a list of investments that can give you regular income. Have a look and choose according to your requirement and risk profile. Please let me know if you need further clarification.
Dear Amit,
I want to know that as an individual tax payer, what is the tax liability if i invest in debt mutual fund as an income generator.
Yon can look at the details of tax on equity and debt mutual fund in my earlier post. Hope it helps.