Tax-saving FDs: Five banks offering higher interest rate
Tax-saving FDs come with a lock-in period of 5 years and more
A fixed deposit (FD) is one of the safest investment options which offers a fixed return. It is still a choice of investment for many middle-class Indians as it has negligible market-related risks and offers higher interest rates than a savings account. In an FD, the account holder can deposit a specific amount for a fixed tenure.
The bank offers interests, depending on the FD tenure and the deposit amount. This interest varies from bank to bank.
Term deposits are one of the conventional ways to invest money. One does not need to open a separate account for an FD. The amount in FD after attaining the maturity period gets deposited in the bank’s savings account.
Facts you should know about tax-saving deposits:
Tax-saving FDs come with a lock-in period of 5 years and more. A person can not withdraw the money from the FD before the lock-in period in case of any emergency.
The interest on FDs will be paid monthly, quarterly, or annually. One can prefer the compounding option, which means that any interest you receive is re-invested.
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 amount of interest payable is only measured on a quarterly basis. Interest earned from fixed deposits is liable to 10% TDS, but it can be withheld at 20% if a PAN is not submitted.
Individuals can submit Form 15G / Form 15H at their concerned bank in order to get TDS-free interest income. Except for co-operative banks and rural banks, every public or private sector bank offer tax-saving FD schemes.
Premature withdrawal and loans against tax-saving fixed deposits are not allowed. Interest rates on tax-saving deposits differ from one bank to the next.
Before opening a tax-saving fixed deposit in a bank, it is important to compare the latest fixed deposit rates among leading banks in the country.
Latest interest rates:
(These interest rates are for domestic term deposits of less than Rs 2 crore for Indian citizens)
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