Top Tax Saving FD Schemes of 2020

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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Top Five Tax Saving FD Schemes of 2020

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

FD Schemes for Regular Customers

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

FD Schemes for Senior Citizens

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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Calculation of TDS on FD Schemes

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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FD Schemes with Higher Rate of Interest – Features

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

  • DCB Bank:
    • Minimum Deposit: Rs.10, 000
    • Current FD Interest Rates: 7.35% for regular citizens and for senior citizens it is 7.75%
    • Options for Interest Pay-outs: Quarterly interest pay-out or quarterly compounding
  • RBL Bank:
    • Minimum Deposit: Rs.100
    • Current Interest FD Rate: 7.15% for regular citizens and for senior citizens it is 7.65%
    • Options for Interest Pay-outs: Interest pay-out options as well as compounding of interest options are available at various frequencies.
  • IDFC First Bank:
    • Minimum Deposit: Rs.1, 000
    • Current FD Interest Rates: 7.25% for regular citizens and for senior citizens it is 7.75%
    • 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.
  • Yes Bank:
    • Minimum Deposit: Rs.10, 000
    • Current FD Interest Rates: 6.75% for regular citizens and for senior citizens it is 7.25%
  • Laxmi Vilas Bank:
    • Minimum Deposit: Rs.100
    • Current FD Interest Rates: 6.10% for regular citizens and for senior citizens it is 6.60%
    • Options for Interest Pay-outs: In cumulative pay-out, the interest is paid on maturity of the FD scheme and for non-cumulative, the interest is paid on monthly, annually, quarterly, and semi-annually basis.

Who Can Invest?

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.

You May like to Read: SBI FD Interest

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.

Written By: PolicyBazaar - Updated: 16 October 2020
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