Tax-saving FD: These banks are offering up to 6.75% interest
Investments made for five-year tax-saving FDs are tax-exempt under section 80C of the Income Tax Act.
Fixed deposit is still one of the popular investment avenues for many middle-class Indians despite relatively poor returns. For taxpayers, tax-saving fixed deposits is one of the best schemes which is safe and offers good returns with tax savings. The interest rate the depositor earns, however, varies from bank to bank.
Features
— Tax-saving FDs come with a lock-in period of five years and more. A person cannot withdraw the money from the FD before the lock-in period in case of any emergency.
— Loans against tax-saving fixed deposits are not allowed.
— The interest on FDs will be paid monthly, quarterly, or annually.
— Investments made for five-year tax-saving FDs are tax-exempt under section 80C of the Income Tax Act.
— The interest earned from a tax-saving FD is taxable. The interest is added to the annual income and is taxable according to the tax bracket.
— The maximum amount to be deposited in a tax saving FD is Rs 1.5 lakh in a financial year.
Best interest rates
The interest rates on Tax-Saving FDs vary from bank to bank. Take a look at best interest rates offers by private and small finance banks.
Suryoday Small Finance Bank, a small finance bank, is offering best rates on tax-saving deposits among all banks. General customers can get up to 6.75% interest.
Among private banks Yes Bank is offering best interest rates on tax-saving deposits. It is now offering up to 6.5% rate on this type of FD. RBL Bank is offering interest rates up to 6.3%.
Deutsche Bank and Ujjivan Small Finance Bank are offering up to 6.25% interest rates on tax-saving deposits to the general public.
On the other hand, interest rates on tax-saving deposits offer by major commercial banks are much lower. State Bank of India, the country’s largest bank, is offering only 5.40% interest on tax-saving FDs for the public.
HDFC Bank, the country’s largest private sector bank, also offers tax saving fixed deposits with an interest rate of 5.30% for the general public.
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