Bank Tax Saving FDs: Tax saving fixed deposits are a good investment option for those individuals who want to invest to get a fixed return and people also claim tax deductions in it. However, tax deduction on tax saving FD is available only to those individuals who choose the old tax regime.
Bank Tax Saving FDs: If you want to avail tax deduction on your earnings and enjoy a fixed return, then you can invest in tax saving fixed deposits (FD). The maximum amount that can be invested in a tax-saving FD is Rs 1.5 lakh. Tax-saving FDs have a lock-in period of five years.
For such tax-saving FDs, a maximum deduction of Rs 1.5 lakh can be claimed under Section 80C of the Income Tax Act, 1961.
Keep in mind that the deduction under Section 80C is limited only to those individuals who choose the old tax regime while filing their income tax return (ITR) in a financial year. No such deduction is available under Section 80C in the new tax system.
Here are five banks offering the highest interest rates on tax saving FDs, including special rates for senior citizens. Keep in mind that these rates are effective for deposits less than Rs 2 crore till October 7, 2023.
DCB Bank Tax-Saving FD Interest Rate
DCB Bank is offering an interest rate of 7.4% on tax-saving FD for individuals below 60 years of age.
IndusInd Bank Tax-Saving FD Interest Rate
IndusInd Bank is offering an interest rate of 7.25% on tax-saving FD with a tenure of 5 years (60 months).
Yes Bank Tax-Saving FD Interest Rate
Yes Bank is offering an interest rate of 7.25% on Tax-Saving FD. As mentioned earlier, the tenure of tax-saving FD is five years.
Axis Bank Tax-Saving FD Interest Rate
Axis Bank is offering an interest rate of 7% on tax-saving FD.
HDFC Tax-Saving FD Interest Rate
HDFC Bank is offering an interest rate of 7% on tax-saving FD. It should be noted that the interest earned on such tax-saving FDs is taxable.
Three main things
The maximum investment amount in tax saving FD is Rs 1.5 lakh.
The tenure of tax-saving FD is 5 years and the investment is locked i.e. cannot be redeemed prematurely.
The interest received from FD itself is not tax-free. Rather, the principal amount invested in a tax saving FD should be claimed as deduction from income up to Rs 1.5 lakh under Section 80C in the year of investment.
