Tax Saver Fixed Deposit for Section 80C Deductions

A Tax Saving Fixed Deposit is a financial instrument designed to help you save on income tax while earning fixed returns on your investment. This type of fixed deposit (FD) comes with a lock-in period of 5 years and offers tax benefits under Section 80C of the Income Tax Act 1961. A tax saving FD is an ideal investment for risk-averse investors who seek a combination of stable returns and tax advantages. This article will help you to understand these FD schemes in detail.

Read more
Maximum returns Offered by Guaranteed

6.5%**

Fixed Deposits

(by SBI bank)

(5-10 Years)

7.1%***

Public Provident Fund

(other popular options)

(15 Years)

We are rated~
rating
58.9 Million
Registered Consumer
51
Insurance Partners
26.4 Million
Policies Sold
In-built life cover
Get Guaranteed returns along with life cover
invest in 100% Guaranteed Return Plans Tax benefits under sec 80C & No Tax on returns+
+91
Secure
We don’t spam
View Plans
Please wait. We Are Processing..
Your personal information is secure with us
Plans available only for people of Indian origin By clicking on ''View Plans'' you, agreed to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs Tax benefit is subject to changes in tax laws
Get Updates on WhatsApp
We are rated~
rating
58.9 Million
Registered Consumer
51
Insurance Partners
26.4 Million
Policies Sold

What is a Tax Saving Fixed Deposit?

A Tax Saving Fixed Deposit, also known as Tax Saving FD, is a type of fixed deposit that allows you to claim a tax deduction of up to Rs. 1.5 lakhs per annum under Section 80C of the Income Tax Act, 1961. The tenure of these tax-saving financial investments is 5 years, and the interest earned is taxable. The tax-saving FD interest rates generally range between 6% - 8.25% p.a. for regular citizens and between 6.50% - 8.75% p.a. for senior citizens.

Latest RBI Update:

  • The RBI has introduced a new rule for unclaimed matured fixed deposit accounts. 

  • Under this rule, the funds in such accounts will earn interest as per the lower of the following interest rates:

    • Rates of savings accounts

    • The contracted interest rate of the matured fixed deposit

Comparison Between
Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund
Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund
Guaranteed Return Plans
Returns Before Tax
7.5% (TAX-FREE)
Returns After Tax
7.5%
Guaranteed Returns
Yes
Life Cover
Yes
Tax on Profit
Tax Free*
Risk
No Risk
awards
Still Better than FD’s and Debt Mutual Fund
Fixed Deposits
Returns Before Tax
7% (TAXABLE)
Returns After Tax
4.8%
Guaranteed Returns
Yes
Life Cover
No
Tax on Profit
Taxable
Risk
Low Risk
Debt Mutual Fund
Returns Before Tax
8% (TAXABLE)
Returns After Tax
5.5%
Guaranteed Returns
No
Life Cover
No
Tax on Profit
Taxable
Risk
High Risk
VIEW PLANS
*For annual premium upto ₹5 Lacs

Features of a Tax Saving FD

The key features of a tax-saving fixed deposit are listed in the table below:

Particular Details
Investment Tenure 5 years
Lock-in Period 5 years
Purpose Save on income tax
Maximum Investment Up to Rs. 1.5 lakhs
Interest Rates Fixed, determined at the time of investment
Premature Withdrawal Not allowed 
Tax Benefits  Tax deductions on investment amount under Section 80C 
Tax on Interest Earned Taxable
Financial Institution Offered by banks and financial institutions
Risk Considered a low-risk investment option

Benefits of Tax Saving FD

A tax saving FD offers you various benefits, some of which are mentioned in the list below:

  • Guaranteed Returns: Tax-saving FDs offer assured returns on your investment.

  • Tax Benefits: You can claim deductions under Section 80C of the Income Tax Act for your investments in tax-saving fixed deposits.

  • Fixed Lock-in Period: Your funds in a tax-saving fixed deposit are locked for a specific period. This helps to promote disciplined savings.

  • Capital Protection: The principal amount invested in the tax saving FD is secure, which ensures capital protection.

    fd return beater
  • No Market Fluctuations: Unlike market-linked investments, the tax-saving Fixed Deposit returns remain unaffected by market volatility.

  • Easy to Understand: This simple investment option is suitable for those seeking stability and tax savings.

  • Cumulative and Non-Cumulative Options: You can choose between cumulative interest or regular payouts.

  • Accessibility: Tax saving FDs are offered by various banks and financial institutions, making them easily accessible.

  • Ideal for Risk-Averse Investors: The tax-saving FDs are suited for individuals preferring low-risk investments with tax advantages.

FD interest rates India have fallen consistently over the last 12 years.
Invest in Plans that offer Guaranteed Returns for over 25 Years

People Also Read: Which Bank has the Highest Interest Rate for Fixed Deposits?

Tax Saving FD vs. ULIP vs. Mutual Funds vs. ELSS vs. NPS

Here is a comparison table for Tax-saving Fixed Deposit (FD) with other tax saving investments, like Unit Linked Insurance Plan (ULIP), Mutual Funds, Equity Linked Savings Scheme (ELSS), and National Pension Scheme (NPS).

Criteria Tax-Saving FD ULIP Mutual Funds ELSS NPS
Lock-in Period 5 years 5 years 3 years 3 years Till retirement or 60 years (whichever is earlier)
Risk Level Low Variable (depends on fund choice) Variable (depends on fund choice) Moderate to High Moderate
Return Potential Generally lower compared to market-linked options Variable (depends on fund performance) Variable (depends on fund performance) Generally higher due to equity exposure Variable (depends on fund choice)
Taxation on Returns Taxable Tax-free under Section 10(10D) Taxable Taxable Taxable
Tax Benefit on Investment Qualifies for deduction under Section 80C Qualifies for deduction under Section 80C and 10(10D0 Qualifies for deduction under Section 80C Qualifies for deduction under Section 80C Qualifies for deduction under Section 80CCD(1)
Risk Appetite Low Moderate to High Moderate to High High Moderate
Liquidity Generally low due to the lock-in period Partial withdrawals are allowed after the lock-in period Redemption is possible after the lock-in period Redemption is possible after the lock-in period Partial withdrawals are allowed under certain conditions
Flexibility Limited flexibility in terms of withdrawal and premature closure Flexibility in choosing investment funds Flexibility in choosing funds Flexibility in choosing funds Limited flexibility, subject to certain conditions
Payouts Fixed interest rate Variable, based on fund performance Variable, based on fund performance Variable, based on market conditions Annuity payments after retirement
Purpose Conservative investors looking for fixed returns Investors seeking a mix of insurance and investment Investors looking for market exposure with potential tax savings Investors seeking tax-saving with higher equity exposure Retirement planning with tax benefits

Guaranteed return plan Guaranteed return plan

Conclusion

Tax-Saving Fixed Deposit is a beneficial investment option for you to optimize your tax liabilities while securing your financial future. With the dual advantage of tax deductions under Section 80C and the stability of fixed returns, this best investment plan provides a reliable option for conservative investors looking to balance tax efficiency with capital preservation. Choosing a Tax-Saving Fixed Deposit can be a prudent step toward achieving both financial security and tax optimization. 

Allahabad Bank FD Interest Rates

Allahabad Bank FD Interest Rates

Andhra Bank FD Interest Rates

Andhra Bank FD Interest Rates

Assam Gramin Vikash Bank FD Interest Rates

Assam Gramin Vikash Bank FD Interest Rates

AU Small Finance Bank FD Interest Rates

AU Small Finance Bank FD Interest Rates

Axis Bank FD Rates

Axis Bank FD Rates

Bajaj Finance FD Interest Rates

Bajaj Finance FD Interest Rates

Bandhan Bank FD Interest Rates

Bandhan Bank FD Interest Rates

Bangiya Gramin Vikash Bank FD Interest Rates

Bangiya Gramin Vikash Bank FD Interest Rates

Bank of Baroda FD Interest Rates

Bank of Baroda FD Interest Rates

Bank of Ceylon FD Interest Rates

Bank of Ceylon FD Interest Rates

Bank of India FD Interest Rates

Bank of India FD Interest Rates

Bank of Maharashtra FD Interest Rates

Bank of Maharashtra FD Interest Rates

Baroda Gujarat Gramin Bank FD Interest Rates

Baroda Gujarat Gramin Bank FD Interest Rates

Canara Bank FD Interest Rates

Canara Bank FD Interest Rates

Capital Small Finance Bank FD Interest Rates

Capital Small Finance Bank FD Interest Rates

Central Bank of India FD Interest Rates

Central Bank of India FD Interest Rates

Citibank FD Interest Rates

Citibank FD Interest Rates

City Union Bank FD Interest Rates

City Union Bank FD Interest Rates

Corporation Bank FD Interest Rates

Corporation Bank FD Interest Rates

Dakshin Bihar Gramin Bank FD Interest Rates

Dakshin Bihar Gramin Bank FD Interest Rates

DBS Bank FD Interest Rates

DBS Bank FD Interest Rates

Dena Bank FD Interest Rates

Dena Bank FD Interest Rates

Dhanlaxmi Bank FD Interest Rates

Dhanlaxmi Bank FD Interest Rates

Equitas Small Finance Bank FD Interest Rates

Equitas Small Finance Bank FD Interest Rates

ESAF Small Finance Bank FD Interest Rates

ESAF Small Finance Bank FD Interest Rates

HDFC Bank FD Interest Rates

HDFC Bank FD Interest Rates

HSBC FD Interest Rates

HSBC FD Interest Rates

ICICI Bank FD Interest Rates

ICICI Bank FD Interest Rates

IDBI Bank FD Interest Rates

IDBI Bank FD Interest Rates

IDFC First Bank FD Interest Rates

IDFC First Bank FD Interest Rates

Indian Bank FD Interest Rates

Indian Bank FD Interest Rates

Indian Overseas Bank FD Interest Rates

Indian Overseas Bank FD Interest Rates

IndusInd Bank FD Interest Rates

IndusInd Bank FD Interest Rates

Jana Small Finance Bank FD Interest Rates

Jana Small Finance Bank FD Interest Rates

Karnataka Bank FD Interest Rates

Karnataka Bank FD Interest Rates

Kerala Gramin Bank FD Interest Rates

Kerala Gramin Bank FD Interest Rates

Kotak Mahindra Bank FD Interest Rates

Kotak Mahindra Bank FD Interest Rates

Lakshmi Vilas Bank FD Interest Rates

Lakshmi Vilas Bank FD Interest Rates

Muthoot Capital

Muthoot Capital

Nainital Bank FD Interest Rates

Nainital Bank FD Interest Rates

Odisha Gramya Bank FD Interest Rates

Odisha Gramya Bank FD Interest Rates

Paschim Banga Gramin Bank FD Interest Rates

Paschim Banga Gramin Bank FD Interest Rates

Paytm Payments Bank FD Interest Rates

Paytm Payments Bank FD Interest Rates

PNB FD Interest Rates

PNB FD Interest Rates

Prathama UP Gramin Bank FD Interest Rates

Prathama UP Gramin Bank FD Interest Rates

RBL Bank FD Rates

RBL Bank FD Rates

Saurashtra Gramin Bank FD Interest Rates

Saurashtra Gramin Bank FD Interest Rates

SBI FD Interest Rates

SBI FD Interest Rates

Shriram Finance FD Interest Rates

Shriram Finance FD Interest Rates

State Bank of Hyderabad FD Interest Rates

State Bank of Hyderabad FD Interest Rates

State Bank of Mysore FD Interest Rates

State Bank of Mysore FD Interest Rates

State Bank of Travancore FD Interest Rates

State Bank of Travancore FD Interest Rates

Syndicate Bank FD Interest Rates

Syndicate Bank FD Interest Rates

Tamil Nadu Grama Bank FD Interest Rates

Tamil Nadu Grama Bank FD Interest Rates

Telangana Grameena Bank FD Interest Rates

Telangana Grameena Bank FD Interest Rates

Tripura Gramin Bank FD Interest Rates

Tripura Gramin Bank FD Interest Rates

UCO Bank FD Interest Rates

UCO Bank FD Interest Rates

Ujjivan Small Finance Bank FD Interest Rates

Ujjivan Small Finance Bank FD Interest Rates

Union Bank of India FD Interest Rates

Union Bank of India FD Interest Rates

Uttar Bihar Gramin Bank FD Interest Rates

Uttar Bihar Gramin Bank FD Interest Rates

Uttarakhand Gramin Bank FD Interest Rates

Uttarakhand Gramin Bank FD Interest Rates

Vijaya Bank FD Interest Rates

Vijaya Bank FD Interest Rates

Yes Bank FD Interest Rates

Yes Bank FD Interest Rates

Expand

FAQs

  • Which tax-saving FD is best?

    The best tax-saving FD for you will depend on your individual needs and preferences. 

    Here are some of the best tax-saving FDs in India as of November 2023:

    Bank Interest rate for regular citizens Interest rate for senior citizens
    HDFC Bank FD Rates 7.00% p.a. 7.50% p.a.
    Canara Bank FD Rates 7.00% p.a. 7.50% p.a.
    Axis Bank FD Interest Rates 7.00% p.a. 7.75% p.a.
    BoB FD Interest Rates 6.50% p.a. 7.15% p.a.
    DCB Bank FD Rates 7.60% p.a. 8.10% p.a.
  • Is 5-year FD tax-free?

    No, a 5-year FD is not tax-free. The interest earned on a 5-year FD is taxable under the Income Tax Act 1961. However, you can claim a deduction of up to Rs. 1.5 lakhs per annum on the investment amount under Section 80C of the Income Tax Act.
  • Which investment is 100% tax-free?

    There are a few investment options in India that offer 100% tax-free returns. These include:
    • Unit Linked Insurance Plan (ULIP)

    • Public Provident Fund (PPF)

    • Sukanya Samriddhi Yojana (SSY)

    • National Pension System (NPS)

  • Can we break tax saving fixed deposit?

    No, you cannot break a tax-saving fixed deposit (FD) before the lock-in period of 5 years. Premature withdrawal of a tax-saving FD is not allowed.
* Applicable for Titanium variant of Max Life Smart Fixed-return Digital (Premium payment of 5 years, Policy term of 10 years) and a healthy male of 18 years old paying Rs. 30,000/- monthly (exclusive of all applicable taxes)
** Fixed deposit rate applicable for 5 year's 1 day to 10 years for investment amount less< 2 Crore ( Not for senior citizens).
*** PPF interest rate applicable for 15 years for investment amount upto 1.5 Lac
+ Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
#Discount offered by insurance company
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
highest guaranteed return
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

FD Rates articles

Recent Articles
Popular Articles
BOI FCNR (B)

10 Jul 2024

BOI FCNR (B) Deposits, also known as Foreign Currency
Read more
BOI NRE Term Deposit Account

10 Jul 2024

BOI NRE Term Deposit Account is a fixed deposit account offered
Read more
BOI RFC Term Deposit

10 Jul 2024

BOI RFC Term Deposit is a fixed deposit account offered by the
Read more
BOI NRO Term Deposit Account

10 Jul 2024

BOI NRO Term Deposit Account is a fixed deposit account offered
Read more
BOI Current Deposits Plus Scheme

10 Jun 2024

The BOI Current Deposits Plus Scheme is a unique option for
Read more
Application for Withdrawal of Fixed Deposit
  • 03 Dec 2021
  • 22811
Fixed Deposits are the safest investment instruments. You invest the amount of your choice as the fixed deposit
Read more
Which Bank has the Highest Interest Rate for Fixed Deposit?
  • 23 Jul 2018
  • 211420
The Small Finance Banks offer the highest FD interest rates for a tenure between 7 days to 10 years. Unity Small
Read more
SBI Fixed Deposit Monthly Income Scheme
  • 04 Apr 2022
  • 12267
Fixed deposits are the safest investment vehicles for Indian financial planners. You can open a fixed deposit
Read more
SBI Fixed Deposit Double Scheme
  • 18 Feb 2022
  • 12494
The SBI Fixed Deposit Double Scheme is named Special Term Deposit to cater to investors looking to double their
Read more
Nominee Vs Legal Heirs for Fixed Deposits
  • 21 Dec 2023
  • 3180
Fixed deposits are a popular investment option for individuals who wish to earn a stable rate of interest on
Read more

top
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL