Top Tax Saving FD Schemes of 2022

For every earning individual, whose income falls under the taxable salary slab, it is a must to invest in any tax-saving investment scheme. There is a vast array of investment options available in the market but for the investors who do not want to take risks, banks’ fixed deposit schemes for five years rank highest. The FD schemes offer guaranteed returns at attractive interest rates, which makes them worth considering.

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Fixed Deposits offer flexibility in the deposit amount on the basis of the investor’s convenience. According to section 80C of the IT Act, one can claim Income Tax deductions of up to Rs.1, 50, 000 for every financial year when filing an Income Tax Return. 

Top 10 Tax Saving FD Schemes of 2022

Below mentioned is the list of the top ten tax-saving Fixed Deposit schemes offered by different Indian banks for individuals:

FD Schemes for Regular Customers

The below table illustrates the FD returns for regular customers based on investment amount for 3 years: 

Bank’s Name Interest Rate (% per year) The amount at the time of Maturity (If You Invest Rs.50, 000) The amount at the time of Maturity (If You Invest Rs.1, 00, 000)
DCB Bank 5.95% Rs.67,275 Rs.1, 34, 550
State Bank of India 5.40% Rs. 65,459 Rs. 1,30,917
HDFC Bank  5.30% Rs. 58,556 Rs. 1,17,111
RBL Bank 6.30% Rs.68,457 Rs.1,36,913
Deutsche Bank  6.25% Rs. 68286 Rs. 1,36,573
Bank of Baroda  5.25% Rs. 64972 Rs. 1,29,943
Axis Bank  5.75% Rs. 66,609 Rs. 1,33,208
IDFC Bank  5.25% Rs. 68,286 Rs. 1,36,573
Kotak Mahindra Bank  5.30% Rs. 58,556 Rs. 1,17,111
Punjab National Bank  5.25% Rs. 64,972 Rs. 1,29,943

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.

The table is updated in Feb’2022

FD Schemes for Senior Citizens

The below table illustrates the FD returns for senior citizens based on investment amount for 3 years:

Bank’s Name Interest Rate (% per year) The amount at the time of Maturity (If You Invest Rs.50, 000) The amount at the time of Maturity (If You Invest Rs.1, 00, 000)
DCB Bank 6.45% Rs. 60,581 Rs. 1,21,162
State Bank of India 5.90% Rs. 59,604 Rs. 1,19,209
HDFC Bank  5.80% Rs. 59,428 Rs. 1,18,857
RBL Bank 6.80% Rs. 61,210 Rs. 1,22,420
Deutsche Bank  6.25% Rs. 60,224 Rs. 1,20,448
Bank of Baroda  5.75% Rs. 59,341 Rs. 1,18,681
Axis Bank  6.25% Rs. 60,224 Rs. 1,20,448
IDFC Bank  5.75% Rs. 58,469 Rs. 1,18,681
Kotak Mahindra Bank  5.80% Rs.59,428 Rs. 1,18,857
Punjab National Bank  5.95% Rs. 59,693 Rs. 1,19,385

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.

The table is updated in Feb' 2022

Note: The above-mentioned rates of interest are subject to change at any time. The maturity amount is for indication only and its sole purpose is to help the investors in planning their investment better. The actual figures can vary.

By looking at the aforementioned tables of FD schemes, it becomes quite clear that fixed deposits are the best tax saving plans that provide decent returns as well.

Calculation of TDS on FD Schemes

According to the latest amendments made in the IT Act, 194(A), if the interest earned on FDs exceeds Rs.40, 000, then the fixed deposit provider or bank will deduct TDS (Tax at Source) at the rate of 10% before disbursing any due interest. The limit for the same is set as Rs.50, 000 for the senior citizens who are more than 60 years old.

Moreover, if you do not provide PAN card details to your FD provider or bank, then the charge of TDS will be 20% in place of the regular 10%. The rate of TDS for NRIs is set at 30% (who have invested in RFC or/and NRO deposits). In case low taxable income, you can submit application form of 15H an 15G for demanding TDS exemption for fixed deposit. 

FD Schemes with Higher Rate of Interest – Features

The following are the benefits and features of FD schemes with higher interest rates:

  1. DCB Bank:

    • Minimum Deposit: Rs.10, 000

    • Current FD Interest Rates: 5.95% for regular citizens and for senior citizens it is 6.45%

    • Options for Interest Pay-outs: Quarterly interest pay-out or quarterly compounding

  2. State Bank of India 

    • Minimum Deposit: Rs. 1,000

    • Current FD Interest Rates: 5.50% for regular citizens and for senior citizens it is 5.90%

    • Options for Interest Pay-outs: Quarterly from the issue date or at maturity. On request, interest may be paid at monthly, half-yearly, or yearly intervals. 

  3. HDFC Bank 

    • Minimum Deposit: Rs. 500

    • Current Interest FD Rate: 5.30% for regular citizens and for senior citizens it is 5.80%

    • Options for Interest Pay-outs: Monthly or Quarterly interest payouts 

  4. RBL Bank:

    • Minimum Deposit: Rs.100

    • Current Interest FD Rate: 6.30% for regular citizens and for senior citizens it is 6.80%

    • Options for Interest Pay-outs: Interest pay-out options, as well as compounding of interest options, are available at various frequencies.

  5. Deutsche Bank: 

    • Minimum Deposit: Rs. 20,000

    • Current FD Interest Rates: 6.25% for regular citizens and for senior citizens it is 6.25%

    • Options for Interest Pay-outs: Monthly or Quarterly Interest Payouts

  6. Bank of Baroda Bank: 

    • Minimum Deposit: Rs. 1,000

    • Current FD Interest Rates: 5.25% for regular citizens and for senior citizens it is 5.75%

    • Options for Interest Pay-outs: Monthly, Quarterly, or Half-yearly

  7. Axis Bank: 

    • Minimum Deposit: Rs. 5,000

    • Current FD Interest Rates: 5.75% for regular citizens and for senior citizens it is 6.25%

    • Options for Interest Pay-outs: Monthly, Quarterly, half-yearly, or annual basis

  8. IDFC Bank:

    • Minimum Deposit: Rs.1, 000

    • Current FD Interest Rates: 5.25% for regular citizens and for senior citizens it is 5.75%

    • Options for Interest Pay-outs: Cumulative and non-cumulative both the options are available. For pay-outs, the interest is calculated every quarter and is paid every month at a discounted price on the standard first FD interest rates of IDFC bank.

  9. Kotak Mahindra Bank 

    • Minimum Deposit: Rs. 10,000 for existing customers and Rs. 25,000 for a new customer 

    • Current FD Interest Rates: 5.30% for regular citizens and for senior citizens it is 5.80%

    • Options for Interest Pay-outs: Monthly or Quarterly payouts 

  10. Punjab National Bank 

    • Minimum Deposit: Rs. 10,000 

    • Current FD Interest Rates: 5.25% for regular citizens and for senior citizens it is 5.95%

    • Options for Interest Pay-outs: Monthly/ Quarterly/Half-Yearly/ Yearly 

Who Can Invest in FD Schemes? 

As per the current laws of the Income Tax, only individuals and Hindu Undivided Families are eligible to invest in tax-saving FD schemes. You can open an FD account either with a bank in which you have your savings account or with some other bank wherein you do not have any savings account, however, if that bank allows you the same.

In the latter case, where you do not have a savings account with the bank, you have to go to the Know-Your-Customer (KYC) process. For the same, you will have to give your self-attested ID proof’s copies such as PAN card, proof of address like driving license or passport, and photographs of passport size.

Tax Deductibles on FDs 

As per section 80C of the Income Tax Act, 1961, a person can claim a tax deduction of up to Rs. 1.5 lacs in tax-saving FDs. The amount will be deducted from the gross salary of the person to reach the taxable income.  Following is a list of criteria that is to be fulfilled to claim for this tax deduction: 

  • HUF (Hindu United Families) and individuals are eligible to invest in tax saving FD schemes 

  • The FD can be of the minimum deposit as stipulated by the bank 

  • The Tax saving FDs have a five-year lock-in period. Loans and pre-mature withdrawals against the FDs are not allowed. 

  • Individuals may invest in FDs by any public or private sector banks except rural and cooperative banks. 

  • Post office FDs are transferrable between post offices 

  • Tax-deductible FDs have a facility of nomination 

  • Banks provide higher interest rates to senior citizens on these types of FDs. 

  • Interest earned on these types of FDs is taxable under the tax bracket of investor, therefore, TDS (Tax Deductible at Source) is applicable. 

Summing it Up!

If you are the one who is looking for a self-invasive option for saving tax but do not want to get a low interest, then a fixed deposit scheme for five years is all that you need. In FD schemes you can choose the option of interest intervals, which may vary from one bank to another. This makes fixed deposits one step ahead of any other tax-saving investment plans.

Even though some government schemes like PPF provide good interest rates but they fall behind FD schemes as your money is locked in for a longer period which is of 15 years.

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Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

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