Tax-saving FDs are one of the ways an individual can reduce their tax outgo and also earn an assured guaranteed income, however, tax-saver FDs come with a mandatory lock-in period of five years. You can invest a maximum amount of Rs 1.5 lakh in a tax-saving FD.
Under section 80C of the Income-tax Act, 1961 an individual would get a tax deduction of the amount invested in eligible investments. However, it must be noted that any income arising from selling these eligible investments for which the Section 80G deduction was claimed would be taxable in the hands of the taxpayer.
“Many taxpayers opt for 5-year tax-saving fixed deposits (FDs) to claim a tax deduction. Although the initial investment qualifies for a tax deduction under section 80C, it’s crucial to remember that the interest earned on these FDs is still taxable. Interest from FDs is considered ‘Income from Other Sources’ and needs to be included in your total taxable income,” says Rahul Singh, Senior Manager, Advisory and Research, at Taxmann.
Also read: Last-minute tax-saving investment: Will investing in PPF and SSY on March 30 and March 31 qualify for tax benefits in FY 2023-24?
Here’s the latest interest rate on tax-saving FDs for general public offered by various public and private sector banks for making tax savings FDs:
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IndusInd Bank tax-saving FD rate
IndusInd Bank’s tax-saving FD of five-year tenure is offering an interest rate of 7.25%.
Axis Bank tax-saving FD rate
Axis Bank is offering an interest rate of 7% for investing in its tax-saving FDs.
HDFC Bank tax-saving FD rate
HDFC Bank’s tax-saving FD of five-year tenure is offering a 7% interest rate.
ICICI Bank tax-saving FD rate
ICICI Bank’s tax-saving FD of five-year tenure is offering an interest rate of 7%.
Kotak Mahindra Bank tax-saving FD rate
Kotak Mahindra Bank’s tax-saving FD of five-year tenure is offering an interest rate of 6.2%.
State Bank of India tax-saving FD rate
State Bank of India’s tax-saving FD of five-year tenure is offering a 6.5% interest rate.
Bank of Baroda tax-saving FD rate
Bank of Baroda tax-saving FD is offering an interest rate of 6.5%.
Punjab National Bank tax-saving FD rate
Punjab National Bank tax-saving FD will fetch you an interest rate of 6.5%.
Central Bank of India tax-saving FD rate
Central Bank of India is offering an interest rate of 6.25% on its tax-saving FDs.
Union Bank of India tax-saving FD rate
Union Bank of India is offering an interest rate of 6.5% on its tax-saving FD.
Bank Name | General Public | Senior Citizens |
Axis Bank | 7 | 7.75 |
HDFC Bank | 7 | 7.5 |
ICICI Bank | 7 | 7.5 |
Kotak Mahindra Bank | 6.2 | 6.7 |
IndusInd Bank | 7.25 | 7.75 |
State Bank of India | 6.5 | 7.5 |
Bank of Baroda | 6.5 | 7.15 |
Punjab National Bank | 6.5 | 7 |
Central Bank of India | 6.25 | 6.75 |
Union Bank of India | 6.5 | 7 |
Source: Paisabazar.com
As on March 28, 2024
Senior citizen tax-saving FD rates
As per the Income Tax Act, senior citizens are individuals aged 60 and above but below 80 years of age. Senior citizens usually get an additional interest rate for investing in FDs. So, they will get a slightly higher return than the general public from tax-saving FDs.
IndusInd Bank tax-saving FD rate for senior citizens
IndusInd Bank’s tax-saving FD of five-year tenure is offering a 7.75% interest for senior citizens.
Axis Bank tax-savings FD rate for senior citizens
Axis Bank is offering an interest rate of 7.75% for investing in its tax-saving FDs for senior citizens.
HDFC Bank tax-saving FD rate for senior citizens
HDFC Bank’s tax-saving FD of five-year tenure is offering a 7.5% interest rate.
ICICI Bank tax-saving FD rate for senior citizens
ICICI Bank’s tax-saving FD of five-year tenure is offering a 7.5% interest rate for senior citizens.
Kotak Mahindra Bank tax-saving FD rate for senior citizens
Kotak Mahindra Bank tax-saving FD of five-year tenure is offering a 6.7% interest rate for senior citizens.
State Bank of India tax-saving FD rate rate for senior citizens
State Bank of India tax-saving FD of five-year tenure is offering a 7.5% interest rate for senior citizens.
Bank of Baroda tax-saving FD rate rate for senior citizens
Bank of Baroda tax-savings FD is offering an interest rate of 7.15% for senior citizens.
Punjab National Bank tax-saving FD rate for senior citizens
Punjab National Bank tax savings FD will fetch you an interest rate of 7%.
Central Bank of India tax-saving FD rate for senior citizens
Central Bank of India is offering an interest rate of 6.75% on its tax savings FD for senior citizens.
Union Bank of India tax-saving FD rate for senior citizens
Union Bank of India is offering an interest rate of 7% on its tax savings FD for senior citizens.
Banks are obligated to deduct Tax at Source (TDS) if your FD interest income surpasses specified threshold limits. “However, if your income falls below the taxable limit, you can evade TDS by submitting Form 15G/15H to the bank,” says Singh from Taxmann.