Income tax-saving FDs: Latest SBI, ICICI Bank, PNB, HDFC, Axis Bank interest rates compared

New Delhi: Tax-saving fixed deposits (FDs) are among the savings options that offer income tax benefits under Section 80C . Normally, tax saver deposits are of two types— ‘Single holder type deposits’ and ‘Joint holder type deposits’. In case of a joint account, tax benefit will be availed by first holder of the deposit as per the Income Tax Act, 1961. An investor can claim deduction up to ₹ 1.5 lakh by investing in tax-saving FDs. To save tax, many prefer this investment as they are considered to be less risky compared to equities.

Recently, many banks, including SBI, PNB, HDFC Bank and ICICI Bank, have hiked their fixed deposit rates, including those on tax-saving FDs. These tax-saving FDs have a lock-in period of five years. This means that partial/premature withdrawal from tax-saving FDs is not permitted before the lock-in period of five years. The minimum investment amount can vary from bank to bank.

SBI tax-saving FDs

An investor can open an SBI tax-saving FD with a minimum deposit of ₹ 1,000. Currently, SBI is offering 6.85% interest rate on tax-saving FDs of maturity between 5 years and 10 years.

HDFC Bank tax-saving FDs

HDFC Bank allows opening of tax-saving deposits with a minimum amount of ₹ 100. HDFC Bank offers fixed deposits of maturity of up to 10 years. The bank is offering interest rate of 6.5% on tax-saving FDs.

ICICI Bank tax-saving FDs

The minimum amount required for opening an ICICI Bank tax-saver FD is ₹ 10,000. ICICI Bank offers interest rate of 7.25% on five-year tax-saver FDs.

Axis Bank tax-saving FDs

An Axis Bank tax-saving FD account can be opened with a minimum amount of ₹ 100. The Axis Bank tax-saver FD has a term of 5 years, and for FDs with maturity between 5 and 10 years, the bank offers an interest rate of 7%.

PNB tax-saving FDs

The minimum amount required for opening PNB tax-saver FD account is ₹ 100. PNB offers interest rate of 6.25% on five-year tax-saver FDs.

Other things to know about tax-saving FDs

1. The maturity period of a tax-saver FD is 5 years.

2. You can get tax deduction up to ₹ 1, 50,000.

3. The interest earned from tax-saver FDs is taxable. Tax will deducted at source.

4. Premature withdrawal is not available.

5. You cannot get loan against tax-saver FDs.