Tax-saving fixed deposits (FDs) are among the savings options that offer income tax benefits under Section 80C. An investor can claim deduction up to ₹1.5 lakh by investing in tax-saving FDs. These are considered to be less risky compared to equities. Recently, many banks, including SBI, PNB, HDFC Bank and ICICI Bank, have slashed their fixed deposit rates, including those on tax-saving FDs. The minimum investment amount can vary from bank to bank.
SBI tax-saving FDs
SBI offers an interest rate of 6.25% for genral customers and 6.75% for senior citizens on its tax-saving FDs. The minimum deposit in an SBI income tax saving FD is ₹1,000 and in multiples thereof whereas the maximum deposit should not exceed ₹1,50,000 in a year.
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 6.30% on tax-saving FDs. Senior citizens get 50 basis point extra on these deposits.
ICICI Bank tax-saving FDs
ICICI Bank offers an interest rate of 6.6% to general customers and 7.10 % to senior citizens on FDs with maturity between five years and 10 years. The minimum amount required for opening an ICICI Bank tax-saving FD is ₹10,000, whereas the maximum deposit should not exceed ₹1,50,000 in a year.
Bank of Baroda tax-saving FDs
On FDs maturing between five years and ten years, BoB offers an interest rate of 6.25 %.
PNB tax-saving FDs
The minimum amount required for opening PNB tax-saver FD account is ₹100. PNB offers interest rate of 6.30% on five-year tax-saver FDs.
The maturity period of a tax-saver FD is 5 years. The interest earned from tax-saver FDs is taxable. Premature withdrawal cannot be done in tax-saving FDs and you cannot get loan against tax-saver FDs.