A tax-saving FD is a type of financial instrument offered by banks and financial institutions across the country. Section 80C of the Income Tax Act recognises a tax saver FD, which allows you to avail of tax benefits of up to Rs.1.5 Lakh annually.
In this regard, a tax saving Fixed Deposit is also considered a less-risky investment instrument, owing to a fixed interest rate that remains unchanged due to market conditions.
Read on to get more details on the top tax saving FDs available in India.
Mentioned are the top 10 tax saving FDs in India:
| Bank | FD rate for general public | FD rate for senior citizens |
| HDFC Bank | 5.50% | 6.25% |
| IDBI Bank | 5.10% | 5.60% |
| IndusInd Bank | 7.00% | 7.50% |
| Federal Bank | 5.75% | 6.40% |
| DCB Bank | 6.60% | 7.10% |
| IDFC Bank | 5.75% | 6.25% |
| RBL Bank | 6.75% | 7.25% |
| YES Bank | 7.00% | 7.25% |
| Axis Bank | 5.50% | 6.05% |
| State Bank of India | 5.40% | 6.20% |
A tax saver FDbrings in various features and benefits, such as:
It is evident that a tax saver FDis one of the ideal ways to park money and accumulate wealth without bearing much risk. You can consider comparing different tax saving Fixed Deposit options on platforms like Bajaj MARKETS. This platform features a diversified marketplace of various FD options offered by leading banks and financial institutions of the country.
Similar to any other investment tool, it is crucial to consider a few factors before investing in Fixed Deposits. These factors are:
You can only claim a maximum of Rs.1.5 Lakh under Section 80C from a variety of investments and expenses, including PPF, NPS, life insurance premiums, and home loan EMIs. If you have already maximise your tax savings through one or more of these methods, note that investing in a tax-saver FD will not provide you with any additional tax benefits.
Keep your financial goals in mind and make sure that their time horizon corresponds to the 5-year lock-in period of your tax saver FD. Always plan your investments and coincide them with your financial goals, whether long-term or short-term. This will help you meet your financial obligations conveniently and in a hassle-free manner.
A tax-free FD is a good mid-term investment. However, note that 5 years is still a long term. So, if you decide to open a fixed deposit account, make sure to choose a nominee for your FD account. This will make it easier for your family to obtain benefits in case of an unfortunate accident.
Before making an investment decision, consider the tax-saving FD interest rates offered by various banks. Since the interest rate is a major determining factor in the returns you generate after the tenor, you should keep this point in mind before making a decision.
When it comes to Fixed Deposits, you need to know about the recent rule announced by the Reserve Bank of India. As per the RBI, if there are any unclaimed funds, then a matured FD account will attract as per that of a savings account or the at the rate of matured FD, whichever is lower. In this regard, if you have an FD account, remember to submit Form 15H at the beginning of a financial year.
A tax saver FD is a great financial tool for risk-averse individuals seeking to gain decent returns over a short time frame. However, before signing up, consider assessing your financial goals and the investment’s terms and conditions. This will help you make an informed investment choice.
