These FDs, small saving schemes offer tax benefits up to ₹1.5 lakh

Income from other sources including savings -- is generally taxable. To know the actual gains on your investments, tax rates are one of the factors that need to be deducted from your infused capital in various schemes. However, banks and other financial service providers do offer tax benefits in various investment pools that allow investors to minimise their taxable payments. Some of these schemes are fixed deposits and small savings schemes. A depositor can achieve tax deductions up to ₹1.5 lakh in these schemes.

Here's the list along with interest rates: 

Fixed deposits (FDs):

FDs are one of the safest and most traditional investments currently in India. Generally, it is among the likable investment tool as it offers guaranteed returns and comes with the benefit of being risk-free. You can also insure your FDs against threats or losses. Further, the FDs can also be used for loan requirements, however, the terms and conditions vary from bank to bank. Senior citizens tend to earn an additional interest rate on FDs offered by banks.

Currently, many banks and NBFCs have hiked their FD interest rates following RBI's rate hike trends. Check latest rates and tax benefits: 

SBI Tax Saving FD

The largest PSB, the State Bank of India (SBI) offers Tax Saving Scheme with a lock-in period of 5 years. Under the scheme, the minimum tenure is 5 years, and the maximum is up to 10 years. The interest rates are compounded quarterly. However, the bank does not offer loans or advances against these deposits during the lock-in period. The minimum deposit here is about ₹1,000 or multiples thereof, while the maximum deposit can be up to ₹1.5 lakh in a year. The interest rate is applicable to term deposits.

SBI offers a 5.65% interest rate on FDs maturing from 5 years to 10 years to the general category, while senior citizens earn up to 6.30%. These are on FDs below ₹2 crore.

ICICI Bank Tax Saver FD

Meanwhile, ICICI Bank offers Tax Saver FD with a 5-year lock-in period as well. Investment can begin as small as ₹10,000 and maximum up to ₹1.5 lakh for a duration of 5 years. No premature withdrawal and auto-renewal facility is available under the scheme. The interest rate payout is monthly, quarterly, or reinvestment in principal.

On FDs below ₹2 crore, ICICI Bank offers a 6.10% rate to the general category for 5 years under the tax saving scheme. While senior citizens can earn up to a 6.60% rate.

RBL Bank Tax Saving FD

RBL Bank offers a flexible and secured FD scheme with dual tax benefits and attractive returns. A depositor can save tax between ₹100 to ₹1.5 lakh. The tax-saving FD scheme has a tenure of up to 5 years. On tax-saving FDs below ₹2 crore, RBL Bank offers 6.55% to the general category and 7.05% to senior citizens.

These banks offer tax exemption up to ₹1.5 lakh under section 80C of the Income Tax Act. Notably, TDS is applicable at a prevalent rate. Form 15G/15H is required to be submitted by the depositor to get an exemption from tax deduction as per Income Tax Rules.

Notably, the TDS rate on FDs is 10% for Indian residents. However, if Permanent Account Number (PAN) details are not provided under the FD account, then the TDS rate will be as high as 20%.

Small Saving schemes:

Just like FDs, government-backed small saving schemes also offer guaranteed returns along with risk-free benefits. India Post accepts deposits under these small saving schemes. These savings schemes are highly affordable. The Indian government decides interest rates on these savings schemes every 3 months of a year. Here's the list:

Senior Citizen Savings Scheme (SCSS)

Here, an investor can earn up to 7.4% per annum payable on a quarterly basis. There is only one deposit applicable in the account in multiple of ₹1,000 but not exceeding ₹15 lakh. The scheme is available for individuals above 60 years of age, retired civilian employees above 55 years and below 60 years of age, and retired defence employees above 50 years of age and below 60 years.

In case any excess deposit is made in the SCSS account, then the excess amount will be refunded immediately to the depositor and only the PO Savings Account Interest rate will be applicable from the date of excess deposit to the date of refund.

Investment under this scheme qualifies for the benefit of section 80C of the Income Tax Act, 1961.

As per the India Post website, interest is taxable if total interest in all SCSS accounts exceeds ₹50,000/- in a financial year and TDS at the prescribed rate shall be deducted from the total interest paid. No TDS will be deducted if form 15 G/15H is submitted and accrued interest is not above the prescribed limit.

Public Provident Fund Account (PPF )

Under the PPF scheme, a depositor can earn up to 7.1% per annum, which is compounded yearly. The account can be opened with a minimum investment of ₹500 and a maximum of ₹1.5 lakh in a financial year.

Deposits here qualify for deduction under section 80C of the Income Tax Act. Notably, interest earned is tax-free under the scheme.

The scheme has a maturity period of 15 years.

Sukanya Samriddhi Accounts (SSA)

Just like a PPF account, deposits under SSA qualify for deduction under section 80C. Also, interest earned is tax-free.

The scheme offers 7.6% per annum. A minimum deposit of ₹250 can be made with a maximum limit of ₹1.5 lakh in a financial year.

The account can be opened by a guardian n the name of a girl child below the age of 10 years. Only one account can be opened in India either in Post Office or in any bank in the name of a girl child. Notably, this account can be opened for a maximum of two girls in a family. In the case of twins/triplets girls birth -- more than two accounts can be opened.

The scheme matures after 21 years from the date of account opening. Or during the time of marriage of a girl child after attaining the age of 18 years.

National Savings Certificates (NSC)

This scheme also has a tax deduction of ₹1.5 lakh under section 80C. The scheme offers 6.8% compounded annually but is payable at maturity. The account can be opened with a minimum of ₹1,000 and in multiples of ₹100. There is no maximum limit. Notably, any number of accounts can be opened under the scheme.

The scheme has a tenure of 5 years.