Tax-saving deposits are very popular among risk-averse investors, who want to reduce their tax burden, while also seeking decent returns. Most tax-saving deposits come with a lock-in period of 5 years, and allow tax deduction of up to Rs 1.5 lakh per annum under Section 80C of I-T Act.
Tax-saving fixed deposits pay monthly or quarterly payouts of interest offer returns based on age of the investor; senior citizens get slightly better returns than other age groups.
The risk profile of a typical tax-saving FD investor is usually moderate, so list 5 public banks that offer highest returns on tax-saving deposits.
Union Bank of India
The public lender tweaked interest rate on fixed deposits effective November. It now offers 6.7% interest rate on tax-saving FDs with a 5-year lock-in period, and offers an additional 50 basis points to senior investors. So, the interest rate given to senior citizens on a 5-year tax saver Union Bank of India FD comes os 7.2%.
Canara Bank
Another public sector bank that offers good returns on tax-saver FDs is Canara Bank. The bank last revised interest rates on October 31, 2022. The latest interest rate on 5-year Canara Bank tax-saver FD is 6.50% for general public and 7% to senior citizens.
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“Bank Offers 6.50 % p.a. for Canara Tax Saver Deposit scheme (General Public). Maximum deposit acceptable is ₹1.50 Lakh,” Canara Bank has mentioned on its website.
Indian Overseas Bank
Indian Overseas pays third highest interest rate on tax-saver fixed deposit. The new interest rates became effective November 11, 2022. The interest rates on IOB Tax Saver term are 6.40% for general public, 6.90% for senior citizens and 7.15% for super senior citizens.
