The last minute tax saving rush is in full flow, with just about six weeks left for this financial year to end on March 31st 2024. While a lot of us are aware about why ELSS is among the best tax saving investment options, but what if you are a conservative investor? If you do not wish to take risk but at the same time invest your money to save tax, tax saver bank FDs can be a good option.
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So let us explain to you what tax saving bank FDs are and what interest rates are being offered for them by India’s 10 biggest banks.
What Are Tax Saving Bank FDs?
Tax saver bank fixed deposits are FDs that offer tax saving benefits under Section 80C of the Income Tax Act. Tax-saver bank FDs have a lock-in period of 5 years. In terms of capital protection and certainty of return, tax-saving FDs from banks are covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI, for an amount of Rs 5 lakh per bank and per depositor. During lock-in period of five years, the bank FD cannot be withdrawn.
However, tax-saving bank FDs’ biggest disadvantage lies in the taxability of the interest income. For bank FD investors, including five year tax saving ones, tax liability does not end with a TDS deduction. Interest earned from FDs is included in your annual income and then taxed in accordance with your income tax slab.
Also, unlike regular FDs, most banks usually do not allow you to take a loan against tax saver FD.
How Much Tax Can You Save Under Bank Tax Saver FDs?
Just like PPF, home loan principal repayment, life insurance premium and many others, you can claim tax deduction of upto Rs 1.5 lakh per financial year for five year tax saver FDs under Section 80C of the Income Tax Act.
Tax Saving FD Rates Of India’s 10 Biggest Banks
Here are the tax saving FD rates for India’s ten biggest banks (as per their current market cap).
1.HDFC Bank
Regular interest rate-7%
Senior citizens rate-7.5%
Tenure-4 Year 7 Months 1 day to 5 Years
Read More: Want to open a fixed deposit? Check interest rates offered by various banks
2.ICICI Bank
Regular interest rate-7%
Senior citizens rate-7.5%
Tenure-3 years 1 day to 5 years
3.State Bank Of India
Regular interest rate-6.5%
Senior citizens rate-7.5%
Tenure-5 years and up to 10 years
4.Kotak Mahindra Bank
Regular interest rate-6.2%
Senior citizens rate-6.7%
Tenure-5 years to 10 years
5.Axis Bank
Regular interest rate-7%
Senior citizens rate-7.75%
Tenure-5 years to 10 years
6.IndusInd Bank
Regular interest rate-7.25%
Senior citizens rate-7.75%
Tenure-Above 3 years 3 months to below 61 months
7.Bank of Baroda
Regular interest rate-6.5%
Senior citizens rate-7.15%
Tenure-Above 3 Years and upto 5 Years
8.Punjab National Bank
Regular interest rate-6.5%
Senior citizens rate-7%
Tenure-Above 3 years & upto 5 years
9.Union Bank of India
Regular interest rate-6.5%
Senior citizens rate-7%
Tenure-Above 3 years to 5 years
Read More: Tax-Smart Retirement Planning: Tips for a Secure Financial Future
10.IDBI Bank
Regular interest rate-6.5%
Senior citizens rate-7%
Tenure- 5 Years
