Tax saving FD are offered by all banks, and come with a fixed rate of interest, while allowing consumers to save on income tax.
Tax Saving Fixed Deposit: Fixed deposit schemes at banks or the post office act as a sustainable means for those investors with lower risk taking appetite. While many Indians are now looking towards more unconventional ways like stocks and cryptocurrencies to invest, others especially in the senior age group, are more satisfied with traditional ways of savings that would provide guaranteed returns without any financial risks. This is one key reason that fixed deposits, or FDs, have remained one of the most popular investment options in India for decades.
What is a Tax Saving Fixed Deposit?
This is one of the most popular investment options for those who want to invest in a risk free asset and yet have benefits of income tax deduction. Tax saving FD are offered by all banks, and come with a fixed rate of interest, while allowing consumers to save on income tax. If one invests in a tax-saving fixed deposit, it will fetch him or her tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax, Act. The interest earned from fixed deposit will only attract Tax Deducted at Source (TDS), as per the income tax bracket of the investor.
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Tax Saving FD for Senior Citizens
Tax saving FDs are considered one of the best saving options for senior citizens, who are offered higher rates of interests. While investing in tax saving FDs, a general investor can submit Form 15G while senior citizens can submit Form 15H to avoid this deduction. Apart from this, the senior citizens can also claim a deduction of up to Rs 50,000 on interest earned under Section 80TTB. This is especially profitable for senior citizens who are provided a higher rate of interest on bank FDs.
These FDs have a minimum lock-in period of five years and the interest earned on then is taxed as per the investor’s tax bracket. In case, the investment is made jointly, only the first holder listed on the FD receipt shall be eligible for tax benefits. In case of tax saving FDs, premature withdrawals are not allowed as they have a tenure between five to 10 years.
Top 10 Banks Offering Highest Returns on Tax Saving FDs Below Rs 2 Crore (As on June 6, 2022)
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Suryoday Small Finanace Bank: Interest Rate Per Annum – 7.25 per cent
AU Small Finance Bank: Interest Rate Per Annum – 7.25 per cent
Ujjivan Small Finance Bank: Interest Rate Per Annum – 7.10 per cent
DCB Bank: Interest Rate Per Annum – 7.10 per cent
Yes Bank: Interest Rate Per Annum – 7.00 per cent
IndusInd Bank: Interest Rate Per Annum: 7.00 per cent
RBL Bank: Interest Rate Per Annum – 6.80 per cent
IDFC First Bank: Interest Rate Per Annum – 6.75 per cent
Axis Bank: Interest Rate Per Annum – 6.50 per cent
Equitas Small Finance Bank: Interest Rate Per Annum – 6.50 per cent
