Tax-saving fixed deposit schemes qualify for tax deduction under Section 80C of Income Tax Act. As tax saving FDs have fixed interest rate, which remains unchanged throughout its tenure, it offers greater income certainty for those with low risk appetite. Tax saving FDs have a lock-in period of 5 years and therefore, cannot be withdrawn before maturity. Just like most FD schemes, banks usually offer higher interest rates in tax saving FDs to senior citizens.
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Top 10 Tax Saver FD Interest Rates in India
| Banks | Interest Rates (p.a.) | |
| General Citizens | Senior Citizens | |
| Suryoday Small Finance Bank | 9.10% | 9.60% |
| Fincare Small Finance Bank | 8.00% | 8.60% |
| DCB Bank | 7.75% | 8.25% |
| SBM Bank | 7.65% | 8.15% |
| Utkarsh Small Finance Bank | 7.50% | 8.25% |
| IndusInd Bank | 7.25% | 7.75% |
| Ujjivan Small Finance Bank | 7.20% | 7.70% |
| AU Small Finance Bank | 7.20% | 7.70% |
| Capital Small Finance Bank Limited | 7.10% | 7.75% |
| RBL Bank | 7.10% | 7.60% |
Interest rates as of 5th June 2023
Also Know: Which bank offers the highest FD interest rate?
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Tax Saving FD Rates of Private Sector Banks
| Banks | Interest Rates (p.a.) | |
| General Citizens | Senior Citizens | |
| HDFC Bank | 7.00% | 7.50% |
| ICICI Bank | 7.00% | 7.50% |
| IDFC First Bank | 7.00% | 7.50% |
| Axis Bank | 7.00% | 7.75% |
| Federal Bank | 6.60% | 7.25% |
| Jammu & Kashmir Bank | 6.50% | 7.00% |
| Karnataka Bank | 6.50% | 6.90% |
| Tamilnad Mercantile Bank | 6.50% | 7.00% |
| IDBI Bank | 6.50% | 7.00% |
| Kotak Mahindra Bank | 6.20% | 6.70% |
Interest rates as of 5th June 2023
Tax Saving FD Rates of Public Sector Banks
| Banks | Interest Rates (p.a.) | |
| General Citizens | Senior Citizens | |
| Union Bank of India | 6.70% | 7.20% |
| Bank of Baroda | 6.50% | 7.15% – 7.50% |
| Indian Overseas Bank | 6.50% | 7.00% |
| Punjab National Bank | 6.50% | 7.00% |
| State Bank of India | 6.50% | 7.50% |
| Central Bank of India | 6.25% | 6.75% |
| Punjab & Sind Bank | 6.25% | 6.75% |
| UCO Bank | 6.20% | 6.70% |
| Bank of India | 6.00% | 6.75% |
| Bank of Maharashtra | 5.75% | 6.25% |
Interest rates as of 5th June 2023
Features of Tax Saving FD
- Minimum deposit amount: Rs 100 and in the multiples of Rs 100
- Maximum deposit amount: Rs 1.5 lakh in a financial year
- Lock-in period: 5 years
- Higher interest rates for senior citizens usually by 0.5%
- Flexible interest pay out – monthly, quarterly or reinvestment in principal
- In the case of joint deposits, the tax benefit under 80C will be available only to the first holder of the deposit
- Premature withdrawal and auto-renewal facilities are not available
- Interest earned is taxable as per the tax slab of the investor
Eligibility Requirements for Opening Tax Saving Fixed Deposit Account
- Resident individuals
- Hindu Undivided Families
Documents Required for Opening Tax Saving FD Account
Depositors planning to book FD in the bank where they have a savings account or current account simply need to:
- log in to their bank’s net banking or mobile banking platforms to open their fixed deposit account right away, or;
- visit the branch, fill the form to book an FD
Depositors who are not bank customers will have to submit the following KYC documents:
- Proof of Identity (Aadhaar Card, Driving License, Passport, etc.)
- Proof of Residence (Aadhaar Card, Utility Bills, Ration Card, Voter ID Card, Driving License, Passport, etc.)
- Proof of Signature (Passport or Driving License)
- Passport size photographs
3 Comments
Yes Sir, you may do so. But please note that you will be able to claim 80 C deduction only on one FD as the maximum amount is capped at Rs. 1.5 lakh per financial year.
Hi,
which bank is fit to invest in the FD means giving higher interest. I have seen banks like IDFC and Deutsche bank giving high interest rate. Please suggest, how it safe to invest in these banks in terms of FD as compared to other banks
Hi Abhishek,
IDFC First has a credit rating of AA which is good enough while the Deutsche Bank has a rating of BBB+ which represents average rating. It means that the provider do have adequate resources to pay returns to investors but there is risk involved to a certain degree. You should analyse more before finalising. You can check banks like Axis Bank, Yes Bank, HDFC Bank, ICICI Bank, etc. as they are more stable.
Also note that FD in any commercial bank is backed by insurance of Rs. 1 lakh by Deposit Insurance and Credit Guarantee Corporation. This means if the bank defaults, DICGC shall pay compensation of Rs. 1 lakh, irrespective of the FD amount.