Bank fixed deposits (FD) are a popular way to save money. Tax saving FDs are a special category that offer income tax benefits. Many banks including SBI, ICICI, HDFC, RBL and IDFC First Bank offer great tax-saving schemes. An investor can claim a deduction upto ₹1.5 lakh under Section 80C of the Income Tax Act. These tax-saving FDs have a lock-in period of five years.
What is a tax saver fixed deposit?
Tax saver fixed deposit comes with a lock-in period of 5 years. This means that partial or premature withdrawal from tax saving FDs is not permitted before the end of the lock-in period of five years. By availing a tax-saving FD, customer can avail tax benefits under section 80C of the Income Tax Act, 1961.
RBL Bank tax-saving FDs
RBL Bank allows opening of tax-saving deposits with a minimum amount of ₹100. RBL Bank is offering an interest rate of 7.6% on tax-saving FDs maturing between 5 and 10 years
IDFC First Bank tax-saving FDs
IDFC First Bank is offering 7.75% rate on tax-saving deposits. You can open an IDFC First Bank RD account with a minimum amount of ₹10,000.
SBI tax-saving FDs
SBI offers an interest rate of 6.85% on FDs with maturity between five years and 10 years. 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.
ICICI Bank tax-saving FDs
ICICI Bank offers an interest rate of 7% 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
Bank Of Baroda tax-saving FDs
On FDs maturing between five years and ten years, BoB offers an interest rate of 6.7%.
HDFC Bank tax-saving FDs
HDFC Bank offers an interest rate of 6.5% on FDs with maturity between five and ten years. The bank allows opening of tax saving deposits account with a minimum of ₹100.
Other things to know about the income-tax saving FDs
The interest earned on an income tax saving FD is taxable as per the investor’s tax bracket. The interest on tax saving deposits is payable on monthly/quarterly basis. This can be reinvested, if the investor wants so. In the case of joint deposits, the tax benefit under Section 80C will be available only to the first holder of the deposit.