Rate of Interest of Tax Saving FD: HDFC, SBI, Axis, and ICICI Bank

What Happens in Case of the Primary Depositor’s Demise?

If the investor faces any unforeseen situation, his/her nominee can withdraw the amount post-maturity or before. However, the tax-saving FD scheme is the same as other fixed deposit schemes offered by a bank, as the maturity amount is credited directly to the bank account.

Most banks offer tax-saving fixed deposit schemes, but the interest rates vary. In such a situation, you may find yourself considering which bank offers the best fixed deposit rates, only to get confused. However, to dispel any confusion, we are providing the FD interest rates for HDFC, SBI, AXIS, and ICICI Bank.

Here are the interest rates on Tax- Saving FD by some of the top sector banks:

1. State Bank of India:

   The SBI Tax-Saving FD term is for a minimum of 5 years and a maximum it’s 10 years. Being an investor, you can get a tax benefit of up to Rs. 1,50,000 every year and claim the tax benefits under section 80C of the IT Act, 1961. The current SBI FD interest rates for tax-saving deposits for the general public are 6.05%, and for senior citizens, 7.05%. To open this FD scheme online, log on to the net banking of SBI, and make a minimum deposit of Rs. 1000 or Rs. 1, 50,000.

2. HDFC Bank:

   The lock-in period for tax-saving fixed deposits is 5 years, and interest is paid quarterly or monthly. The current HDFC Bank interest rates for its tax-saving fixed deposits are 6.35% for the general public and 6.85% for senior citizens. The minimum amount required to open this HDFC Bank account is Rs. 100, and the maximum is Rs. 1,50,000.

3. ICICI Bank:

   ICICI Bank offers two types of tax-saving fixed deposits: reinvestment plans and traditional plans. The interest paid under the traditional plan can be paid monthly or quarterly. On the other hand, under the reinvestment plan, the interest on the ICICI Bank FD is compounded quarterly and reinvested with the initial principal amount. The minimum investment amount to open this type of account is Rs. 10,000, with a maximum of Rs. 1,50,000. The lock-in period for tax-saving FDs with ICICI Bank is 5 years, and the interest rate offered to the general public is 6.50% p.a., while senior citizens receive 7.10% p.a.

4. Axis Bank:

   With Axis Bank, one can open three types of tax-saver fixed deposits: monthly interest payout, quarterly interest payout, and reinvestment deposits. The lock-in period for these fixed deposits is five years. The current Axis Bank rate of interest for the general public is 6.45% p.a., and for senior citizens, are 6.95% p.a.

Advantages of a Tax-Saving Fixed Deposit

As an investor in a tax-saving fixed deposit scheme, you can enjoy the following benefits:

• One can avail the tax exemption u/s 80C of the Income Tax Act, 1961.
• Flexible lock-in period that ranges from five years to 10 years.
• The maximum amount for which you can avail of the tax deduction is Rs. 1,50,000 / financial year.
• The investors get fixed returns.
• Senior citizens receive an additional 0.50% interest rate.
• An investor can open a joint tax-saving fixed deposit account.

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Eligibility to Open a Tax-Saving Fixed Deposit

The following people are eligible to open a tax-saving fixed deposit account:

• Individuals
• Indian Residents
• Hindu Undivided Families

Documents Needed to Open a Tax-Saving Fixed Deposit

The following list of documents is needed to open a tax-saving fixed deposit account:

• Aadhar card
• PAN card
• Ration card
• Passport
• Proof of address
• Proof of age
• Passport-size photograph

Tax-Saving Fixed Deposits Vs. Other Tax Saving:

Even though bank fixed deposits offer the option of saving tax for investors, there are other options as well that can provide benefits. Their options are – Public Provident Fund (PPF), ELSS Funds, National Pension Scheme (NPS), and National Savings Scheme (NSS):

** The aforementioned values are historic values and the return of NPS may slightly vary.

Summing Up

Despite the recent fall in FD interest rates, Tax-Saving Fixed Deposits remain one of the most reliable investment options under Section 80C, offering a tax deduction of up to ₹1.5 Lakhs annually. Unlike market-linked options like ELSS or long-term schemes like PPF and NSC, Tax-Saving FDs guarantee capital protection with zero risk to your principal. While the 5-year lock-in and taxability of interest are factors to consider, they remain the best-suited investment for those who prioritise safety, stability, and tax efficiency.