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.
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 Income Tax Return. An investment that one can make a five-year tax saving FD scheme qualifies for this IT deduction.
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Below mentioned is the list of top five tax-saving Fixed Deposit schemes offered by different Indian banks for individuals:
Bank’s Name |
Interest Rate (% per year) |
The amount at the time of Maturity (If You Invest Rs.10, 000) |
The amount at the time of Maturity (If You Invest Rs.1, 50, 000) |
DCB Bank |
7.35% |
Rs.14, 394 |
Rs.2, 15, 897 |
RBL Bank |
7.15% |
Rs.14, 251 |
Rs.2, 13, 786 |
IDFC First Bank |
7.25% |
Rs.14, 322 |
Rs.2, 14, 839 |
Laxmi Vilas Bank |
6.10% |
Rs.13, 534 |
Rs.2, 03, 025 |
Yes Bank |
6.75% |
Rs.13, 974 |
Rs.2, 09, 625 |
Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.
The table is updated in July’ 2020
Bank’s Name |
Interest Rate (% per year) |
The amount at the time of Maturity (If You Invest Rs.10, 000) |
The amount at the time of Maturity (If You Invest Rs.1, 50, 000) |
DCB Bank |
7.75% |
Rs.14, 750 |
Rs.2, 20, 176 |
RBL Bank |
7.65% |
Rs.14, 606 |
Rs.2, 19, 098 |
IDFC First Bank |
7.75% |
Rs.14, 677 |
Rs.2, 20, 176 |
Laxmi Vilas Bank |
6.60% |
Rs.13, 972 |
Rs.2, 08, 084 |
Yes Bank |
7.25% |
Rs.14, 322 |
Rs.2, 14, 839 |
Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.
The table is updated in July' 2020
Note: The above-mentioned rates of interest are subject to change anytime. 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.
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According to the latest amendments made in the IT Act, 196, 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 regular 10%. The rate of TDS for NRIs is set at 30% (who have invested in RFC or/and NRO deposits)
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The following are the benefits and features of FD schemes with higher interest rates:
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.
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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.