Tax Saver Fixed Deposits with High Interest Rates

by Nikita Verma on January 19, 2011

in Fixed Deposits

Updated on Jan 2nd 2013.

I updated my tax saver fixed deposits page today, and I thought I’d create a separate page to record some of the better paying interest rates on these tax saving FDs.

With that in mind, here is a list with some of the best interest rates on fixed deposits that are covered under Section 80C that I could find.

I’m sure there are some that I have missed, so if you know of any banks that pay well, please leave a comment or drop in an email, and I will update the list.orted List

Bank Interest Rate
City Union Bank 9.50%
State Bank of Travancore 9.00%
IDBI Bank 9.00%
Indian Overseas Bank 9.00%
Vijaya Bank 9.00%
Bank of Baroda 9.00%
State Bank of Hyderabad 8.75%
South Indian Bank 8.75%
SBI 8.75%
Karur Vysya Bank 8.75%
Bank of Maharashtra 8.75%
J&K Bank 8.50%
Central Bank of India 8.50%
Kotak Bank 8.50%
Canara Bank 8.50%
Punjab National Bank 8.50%
ICICI Bank 8.50%
Allahabad Bank 8.50%
Axis Bank 8.25%

This is just a list of the best tax saving fixed deposits, but those are not the only instruments that offer you tax saving benefits. There are other instruments and this easy to understand graphic explains them to you.

 

{ 140 comments… read them below or add one }

krish January 19, 2011 at 10:25 AM

Manshu,

Do you think these deposit rates will go up after RBI’s policy review on Jan 25th. It is widely believed that there will be a 25 basis point hike.

Reply

Manshu January 20, 2011 at 7:52 AM

Krish – My personal observation is that some of these tax saving FD rates are a bit more sticky than others, and I noticed when I was updating the list that some banks have not updated their rates from the last time (which was quite a few months ago), and RBI has made already what 6 upwards revisions since last year?

So, my thoughts are, yes, wait for the upward move, and then a few days after it, but then don’t count on it too much.

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Ams January 19, 2011 at 10:58 PM

I think they should increase. RBI will hike the interest rate to help curb inflation.

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Manshu January 20, 2011 at 7:54 AM

Yeah, RBI’s rate hike seems to be a foregone conclusion with a lot of folks – I’m tired of hearing how many people are saying RBI is behind the curve when in fact they have been doing an awesome job, and a much better job than most other countries.

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kunal January 20, 2011 at 12:41 AM

HI Manshu,

I’m really confused over investing 20k in infra bonds OR 20k in Tax FD (lacking 18k for 1L limit) for a period of 5 yr, tax bracket 30.
Can you provide any comment?

Thanks.

Reply

Manshu January 20, 2011 at 8:21 AM

Kunal,

Personally, I’d opt for the fixed deposit, and here is my thinking behind it:

1. First and foremost, you get tax saving FDs that pay higher than the bonds, and there is a possibility that even these rates might get hiked in a few more days. So even though the absolute sum won’t be very high, one point in favor of the tax saving fixed deposit.

2. When you have the option available within your 80C (1 lakh) limit then use that up, and keep the option of infra bonds open in case you find that you can invest in them later on.

3. You will have to wait a little bit to get the investment proof, and then some people have faced the issue where the allotment advice has been sent to their old addresses, or the bonds are in the wrong name, or other issues to produce proof of payment.

4. There are some other issues that people have faced like a person wanted to close their Demat account, but since the infra bonds they owned were locked – in – they couldn’t do it right away.

5. The bank fixed deposits are more secure than the unsecured infrastructure bonds, although a situation where such companies will come to a point where they default on their bonds is unlikely.

So, I’d personally make a decision keeping all these points in mind.

Reply

ankit January 24, 2011 at 12:10 PM

lakshmi vilas bank

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ankit January 24, 2011 at 12:30 PM

lakshmi vilas bank 500 days=9.6%,600 days=9.75%

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Manshu January 24, 2011 at 11:17 PM

Thanks for that info Ankit.

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Dipak January 26, 2011 at 10:27 AM

Hi Manshu,

What is your opinion about investing money in NSC tax saving?
can you tell me what is the rate of interst on NSC?

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Manshu January 26, 2011 at 7:30 PM

Dipak – The interest comes to about 8.15% and maturity period is 6 years. Here is the link to their webpage.

http://www.indiapost.gov.in/netscape/6yearsNSC.html

You can compare this with a tax saving FD and see if it makes sense or not.

Reply

Dinesh Shetty January 31, 2011 at 12:39 PM

It’s tax season time. Check out Karnataka bank which gives tax saving FD for 9.00% and will top the TAX SAVING LIST

Reply

Manshu February 1, 2011 at 8:46 AM

Thanks for the info Dinesh.

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Ajay Gupta February 2, 2011 at 3:10 AM

Dear Sir,

My wife is house wife and i have taken the lic policy on her name so please guide me that should i take that amount in tax saving or not.

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Manshu February 5, 2011 at 1:03 AM

Ajay,

I checked this with someone and he told me that a husband can claim lic premium paid on behalf of his wife as a deduction from his income provided the wife is not claiming the same & the premium is paid by husband only.

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K V Subba Rao February 21, 2011 at 3:47 AM

Yes

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K V Subba Rao February 21, 2011 at 3:54 AM

Yes. Premium paid for spouse and children could be claimed

Reply

kksharma February 4, 2011 at 2:42 AM

I want to know best mode of investment for saving under 80C, comparing tax saver FD, ELSS, NSC, MIS and others.
PLEASE SUGGEST

Reply

Manshu February 4, 2011 at 11:20 PM

Hmmm, I’ve not done that comparison yet, and don’t know an answer to that – sorry. a little busy these days, so probably won’t get time to get to it.

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K V Subba Rao February 21, 2011 at 3:52 AM

Amongst the Options provided by you, Tax Saver FD with Bank is a good one.
If you can afford to take some risk, go for ELSS. However I would give first priority to PPF since 8 % interest earned is tax free.

Reply

PRAN February 6, 2011 at 11:24 AM

State Bank of Bikaner and Jaipur gives 9.00% in tax saving deposit, so does Karur Vysya Bank.

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Manshu February 6, 2011 at 6:10 PM

Thanks Pran – I’ll update the post with this info a little later in the week.

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K V Subba Rao February 22, 2011 at 1:36 AM

9.80 % is rate of interest offered by Corporation Bank on Tax Saver FD for Senior Citizens

It is desirable to review and update the rates of Interest atleast once in a fortnight to make the information more useful

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Manshu February 22, 2011 at 7:03 PM

Thanks for that info – I’ll update the post this weekend.

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varma February 22, 2011 at 2:11 AM

Hi

what is the difference between Tax saving FDs and normal FDs and how they are different. can you please illustrate with an example.

regards
Varma

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Manshu February 22, 2011 at 7:02 PM

Tax saving FDs are fixed deposits that allow a deduction of the amount you put in the FD from your taxable income. They are covered under 80C. You can look at this post to get an idea of other options under 80C and how the calculation is done.

http://www.onemint.com/2011/01/05/section-80c-tax-saving-schemes/

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Krishna Kishore March 1, 2011 at 3:09 AM

The 5 year Tax saving FD rate in Karnataka Bank is same as Kotak Bank

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Manshu March 3, 2011 at 8:36 AM

I’ll update the post this coming weekend.

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ramesh kothamasu March 3, 2011 at 2:31 AM

rate of interest in tmb tsd- (mullai) for tax saver scheme is 9.75%. this is for ur kind information. any way thanks for ur data

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Manshu March 3, 2011 at 8:07 AM

Hey Thanks Ramesh. I’m not familiar with this bank – can you please send the link to their website so I can update info from that.

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Kiran March 5, 2011 at 2:21 AM

http://www.tmb.in/d_taxsaving.htm ( Tamilnad Mercantile Bank Ltd )

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Manshu March 5, 2011 at 10:42 AM

Thanks Kiran.

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Kiran March 5, 2011 at 2:20 AM

^ http://www.tmb.in/d_taxsaving.htm ( Tamilnad Mercantile Bank Ltd )

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pallavi March 18, 2011 at 12:42 AM

Hi Kiran,
Do we need a savings account with TMB before investing in a tax saving term deposit?

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Ajay August 8, 2011 at 7:58 PM

Hi,
Is it safe to invest in tamilnad mercantile bank ltd fixed deposit?

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Manshu August 9, 2011 at 5:08 AM

Ajay – up to Rs. 1 lakh is insured by RBI, and the bank has been okay, so it seems to be okay.

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Ajay August 9, 2011 at 1:17 PM

Thank you Manshu

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pallavi March 18, 2011 at 12:44 AM

is it true that returns on the term deposits offered by private sector banks is higher as compared to public sector banks?

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Manshu March 18, 2011 at 7:42 AM

No, not necessarily, it’s imp to do a little bit of research at that point in time and see who is offering the best rate.

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Mohit Taneja March 26, 2011 at 11:42 PM

OBC Bank gives 9.5 %

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deepak April 8, 2011 at 2:22 AM

please help me and tell me the Interest rates on 21/01/2011 on Tax saving Fixed deposit in Panjab and Sind Bank

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Manshu April 8, 2011 at 10:57 AM

Don’t have it sorry.

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deepak April 9, 2011 at 1:27 AM

sir, please tell me from where i can get it. actually i got an FD made from above bank. they made it at 7.0% i doubt that rate was higher on that day. now bank peoples are not cooperating. please help me
deepak

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Manshu April 9, 2011 at 7:02 AM

Sorry to hear your trouble, the bank will have info on that. I don’t know where else you can find it.

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Umesh September 1, 2011 at 3:38 PM

Hi Deepak

I hope your problem must have been solved by now. Generally banks do not make mistakes, but when they are not listening to your complaint may mean something wrong.

If not then you should try to get the right information from other branches of P&SBank in your city and make a complaint to regional and head office of P&SBank, if needed. You can do some homework yourself to get the right information.

Secondly check the Tax saver FD Receipt you got. It should be mentioned clearly that it is a tax saver FD and the normal one.

Hope the following piece of information that I gathered from various sources may be useful for you.

From BSE website

Subject: Change in Interest Rates of Domestic Term Deposits w.e.f. Feb 25, 2011
Announcement: Punjab & Sind Bank has informed BSE that Bank has announced an increase in interest rates of various tenors of Retail Domestic Term Deposits by 0.05% to 1.00% with effect from February 25, 2011. Rate of interest for 46-90 days term deposit of up to Rs. 1 crore has been raised by 1.00% i.e., to 6.50% p.a. Rate of interest for 222 days, 500 days and 1000 days deposit schemes has been raised to 8.75% p.a., 9.55% p.a. and 9.60% p.a., respectively. Further, rate of interest on PSB Fixed Deposit Tax Saver Scheme has also been increased from existing 8.50% p.a. to 9.05% p.a.

Note (from me): {(From this announcement from BSE, one can conclude that the rates prevailing should be 8.50% for Tax saver FD). (if there is no change of rates in between.)}

Excerpts (edited) from a website dealing in financial topics

Punjab and Sind Bank raises base rate, BPLR
Dec 23, 2010

Public sector lender, Punjab & Sind Bank has revised its lending rates. The bank has raised its base rate by as much as 55 basis points. The base rate of the bank now stands at 9% from 8.45% earlier.
(a few lines omitted)
BPLR was replaced by base rate from July 1, 2010.
The bank has also raised fixed deposit rates across selected maturities. The 222 days, 500 days and 1,000 days deposits will now fetch interest of 7.5%, 8.75% and 9% respectively.

Unedited excerpts from an article from a financial newspaper

Punjab & Sind Bank raises deposit rates by up to 0.75 pc
PTI Aug 11, 2010, 07.08pm IST

NEW DELHI: State-owned lender Punjab & Sind Bank on Wednesday announced an increase in interest rates on fixed deposits (FDs) of different maturities by up to 0.75 per cent per annum.
The new rates will be effective from August 4, the bank said in a release.
The new deposit rates range from 2.50 per cent to 7.50 per cent on FDs of 7 days to 10 years’ tenor, said a bank official.
Punjab and Sind Bank’s decision to hike deposit rates follows similar steps taken by leading banks like ICICI Bank, Punjab National Bank, Union Bank of India, Oriental Bank and HDFC Bank.

Note (from me): Many banks pay less interest on the Tax Saver FD in comparison to normal FD of 5 year duration

Now on the basis of above you can make your own conclusion.

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deepak October 9, 2011 at 1:39 PM

Thank you sir, i m very thankful to you for the time you have spent searching the answer for my query. Thank you again.

I had contacted bank 3-4 times by personally visiting the bank also but due to their fault they are very uncooperative to talk about it. Ultimately at that time, finding no other alternative, i left this matter.

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Shankar April 19, 2011 at 12:21 AM

Manshu,
If I deposited 10 lakhs in a back that offers 9.00% in a tax saving fixed deposit for 5 years. How much would be taxed from the interest that’s earned each year?

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Manshu April 20, 2011 at 11:38 AM

Shankar – the tax benefit is only to the extent that money you invest in this will be reduced from your taxable income. So, once that’s done – the FD is treated as ordinary FD and the interest will be taxable like others.

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Subodh August 6, 2011 at 1:21 PM

Whether TDS is applicable on interest earned on Taxable FD?

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Manshu August 6, 2011 at 9:47 PM

Yes, interest earned is taxable.

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Rohit August 16, 2011 at 10:20 AM

Hi Manshu,

I want to invest Rs. 150,000 either in Fixed deposit for five years or in NSC? Which option will give me better return ? I have been told that 10% tax is deducted from the interest accumulated in the FD. What about tax deduction in NSC?

Reply

Manshu August 17, 2011 at 6:14 AM

Hi Rohit,

NCS falls under 80C investments, so you will get tax rebate by investing in NSC upto Rs. 1 lakh, and if you don’t have any other plans to use 80C, then this can be a good way. Interest income is taxable in both instruments now. NSC may not have TDS but the interest is still taxable.

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Umesh August 17, 2011 at 12:01 PM

NSC falls under 80C, so you will get deduction by investing in NSC (subject to 1 lakh limit), the interest accrued is also exempted from tax and the interest amount is eligible for 80C deductions (being reinvested ?) (subject to 80C limit) but the main drawback in NSC is (I have learnt ?), the whole amount that you will get on maturity (maturity value), is included in your income and SUBJECT TO TAX. You save on tax @ say 10% and end up paying @ say 10-20% after 6 years.

In tax saver fixed deposit, the lock in period is 5 years and not 6 years (as in case of NSC) though the interest in taxable but currently it will be almost at par with NSC interest (after tax) and the maturity value is is not subject to tax like other FDs (as far as I know).

One more thing I do not understand why so much importance in given to PPF as a tax saving instrument, except the tax earned is tax free. Any comment.

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Manshu August 18, 2011 at 4:47 AM

Hi Umesh,

Interest being tax free is a pretty sweet deal for people who fall under the 30% tax bracket and that’s why it’s popular I think.

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DHANANJAYAN January 17, 2012 at 4:46 PM

NSC is now 5 years.

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Jaimin Solanki August 30, 2011 at 11:27 AM

Hello,
My age is 25 years…
I want to know one thing..
What is the maximum limit I can put my money in Bank FDs?
Ex –
If I invest 1,00,000 in Indian overseas Bank FD in 2012 for one year.. I’ll get matured amount @ 9.25 = 1,09,250..
I keep investing 1,00,000 every year.. and I also put my earned money from FD in another FD @ every maturity…

Is that possible?? and if so, what is the maximum period I can invest??
And Is that a good option considering the childeren education and marriage??

Reply

Manshu August 31, 2011 at 4:50 AM

Well, what you can do is to get a fixed deposit for a longer date from whichever bank you prefer – when you go for slightly longer dated terms then you get a higher rate of interest, and then you can use the money from that maturity to reinvest at a later time.

It’s possible to do what you want, but the only thing is when you create a new FD you will get the rates at that time, not today.

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Jaimin August 31, 2011 at 10:58 AM

Thanks for suggestion…

The thing is I want to invest money for short spans of time…
And other thing… tax(Tax) only deducted from the interest income (if it is bigger than 10,000 Rs)..
Is there any other deductions liable?? (especially on the amount i invest??)

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Somnath Singha August 30, 2011 at 11:32 AM

How many years a sum of Rs 10000/- will be double in State Bank of India Fixed Deposit Scheme

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ankm83 August 30, 2011 at 4:13 PM

would be a good idea to update this post given interest rates at peak.

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Manshu August 31, 2011 at 4:48 AM

Yeah, I need to update this post regardless of whether interest rates have peaked or not. This data has become quite dated.

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Ganesh August 31, 2011 at 10:03 PM

Hello Manshu,

I am planning on investing 5L in a FD for a period of 1-2 years. I have a ICICI savings account but I am unsure whether I should invest 4L in FD’s and 1L in Tax Saver FD, because as you mentioned if my interest amount(from 4L(Taxable FD)+1L(Tax free) FD) is more than 1L then the interest will bear tax.Did I understand your logic correctly?

Thanks

Reply

Umesh September 1, 2011 at 1:14 PM

Hi Ganesh

Any amount earned as interest is taxable and subject to TDS as per rules, whether earned from a normal FD or from a TAX SAVER FD.

The difference in two types of FD is, the amount invested in Tax saver FD which is of 5 year duration (lock in) is subject to 80C deduction in the year of investment unlike normal FDs and not that it is TAX FREE.

Tax saver FDs has some condition like you can not pledge, can not get loan on it, can not encashed prematurely (being 5 years lock in) unlike normal FDs. One more thing, check the rates of interest for 5 year normal FD and tax saver FD as some pay lower rate of interest for tax saver FD.

Umesh

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Umesh September 1, 2011 at 1:15 PM

Hi Manshu

How can I post or send a compilation in a tabular form particularly for, interest on fixed deposit (FD) for various durations and tax saver FD, of various banks. Also can I post links of other websites in comments?

Thanks

Umesh

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Manshu September 4, 2011 at 3:35 AM

The table will not get pasted correctly in the comment box, so if you want something like that to be posted then please email me – onemint at gmail and I will take a look at it. Yeah, please feel free to post any links that you feel are useful to forward the discussion.

Thanks – much appreciated!

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Ganesh September 1, 2011 at 3:27 PM

Thanks Umesh.

Reply

Umesh September 6, 2011 at 8:23 PM

Hi Manshu

I hope that the readers of onemint will find following links useful

A. Get the Highest FD Interest Rates
1. For Fixed Deposits
2. Tax Savings Fixed Deposits
3. NRI Fixed Deposits

http://www.ratekhoj.com/fixed-deposits/index.php

A (a) Fixed Deposit Rates
You can get FD rates based on institution types like banks (Public Sector / Nationalized Banks, Indian Private Sector Banks, Foreign Banks, Cooperative Banks, Post Office Savings Schemes, Companies etc.). You can get interest rates selecting as per deposit period range or you can select specific deposit period for your fixed deposit. You can also search for senior citizen and non senior rates as well. Many banks pay different rates of interest for large deposits, you can select this criteria as well.

The search is broadly categorized in 4 types:

1. FD rates based on institution type/deposit period range
2. FD rates based on institution type/specific deposit period
3. FD rates in selected institutions/deposit period range
4. FD rates in selected institutions/deposit period range

You then fill your search criteria and the resulting table can runs into hundreds of pages. In many cases you have to narrow your search or you have to be specific in your search so that the table may not run in many pages.

You can sort this table as per you choice as per alphabetical list of institutions, period of deposit and rate of interest (highest to lowest) by clicking on the first row of the table.

http://www.ratekhoj.com/fixed-deposits/fixed-deposit-rates/index.php

A (b) Tax Savings Fixed Deposits and other schemes

This web page gives you a selection for schemes that are eligible for tax savings under Sec 80C.

You can choose from the following:
Tax Savings Fixed Deposits in Banks (including rate of interest)
Tax Savings Fixed Deposits in Post Office
Equity Linked Savings Schemes (ELSS)

http://www.ratekhoj.com/fixed-deposits/tax-savings-fixed-deposits/index.php

B. Calculators

Fixed Deposit Interest Calculator – Calculate how much interest payments you can get based on your fixed deposit amount, interest rate and interest payment period.

FD Maturity Calculator – Calculate the maturity amount and effective yield (compound interest rate) of your fixed deposit based on your deposit amount, interest rate and duration

http://www.ratekhoj.com/calculators.php

C. Find Bank IFSC Codes, MICR Codes, Postal Addresses

http://www.ratekhoj.com/banks/index.php

D. Gold Coin Prices Offered by different banks

http://www.ratekhoj.com/goldprice/index.php

Umesh

Reply

Shankar Garg October 7, 2011 at 2:00 PM

Hi,

Please tell me if the interest earned on the tax free FD will be taxable when the tax free FD will mature?

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Umesh October 8, 2011 at 3:04 PM

Hi

You perhaps have some misconception. This is a tax saver FD and not tax free FD.

This 5 year Tax Saver FD saves you tax like other 80C investments in the year of investment but not saves tax on interest earned. Interest is taxable on yearly basis.

Umesh

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Shankar Garg October 8, 2011 at 3:47 PM

Hi Umesh,

I meant Tax saver FD only, it was just a typo error.

Thanks for the info.. ur web page has helped me a lot..

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sivasai November 25, 2011 at 12:07 PM

Hi,

I have a doubt is the amount put in FD wil have tax excemption or the interest occured alone will have tax excemption ? I jus started an RD acc in citi bank. Can i show it as savings in my Tax ?

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Manshu November 27, 2011 at 9:33 PM

Interest is taxable – you have to pay tax on interest. RD can’t be shown as a tax saving instrument.

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Sahil December 7, 2011 at 12:59 AM

if possible update the rates from major banks. better if standalone fresh post, dear manshu

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Manshu December 8, 2011 at 9:53 PM

Dear Sahil – I updated this list recently so they should still be applicable – did you see a rate that was outdated – if so I will spend some time reviewing the whole list else I think they are current. Thanks!

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TCB January 8, 2012 at 9:40 AM

Dear Manshu,

Oriental Bank of commerce is offering 9.75% (+0.5% for senior citizens) for 5 years and Tamilnad mercantile bank is offering 10%(+0.25% for senior citizens) for 5 to 10 years with 5 year lock-in on tax-saving deposits.

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Vijay January 7, 2012 at 7:37 PM

Hello,

Please forgive if my question seems lame, i would like to deposit a sum of 10L in fixed deposit for 5 years under monthly returns of intrests(HDFC 8.87%pa).Could you tell me how is that money(interest) taxed and what is the amount i will be getting monthly.

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bhanu kiran January 9, 2012 at 12:02 PM

hi Every one is there any FD which gives completely tax free on intrest earned ?

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Manshu January 9, 2012 at 9:01 PM

No, but there are tax free bonds that are coming out these days like the NHAI bond which can give you tax free interest.

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bhanu kiran January 9, 2012 at 12:09 PM

hi every one i want to invest for 30000 and i need to choose tax saving plans

Question 1: which one would be better if iam looking to invest for short period

Question2: which one would be better if iam looking to invest for long period

Note: Iam not intrested in Insurance plans.
given the highest returns iam ready to invest in higher amounts and variable period of time .
and the intrest earned should be tax free

Thanks for your suggestions.

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Manshu January 9, 2012 at 9:05 PM

Only the income from PPF is tax free, rest of them are all taxable, so that’s your only option (given your conditions).

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Rohit January 9, 2012 at 2:54 PM
Manshu January 9, 2012 at 9:21 PM

Thanks Rohit – added it now.

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SANJIB KUMAR MISHRA January 16, 2012 at 11:00 PM

I think u r missing the bank name which is giving best return at present of 9.50% with 5year lock-in in tax saver gold & tax-saver silver scheme for both senior citizen & general public, it’s ” City Union Bank Ltd” from kumbakonam, Tamilnadu.

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Manshu January 16, 2012 at 11:41 PM

Thanks – I’ve added City Union Bank in the table now.

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DHANANJAYAN January 17, 2012 at 4:41 PM

this table is last updated on feb 2011. is there any change in this list or it is still applicable as of Jan 2012?

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DHANANJAYAN January 17, 2012 at 4:43 PM

some more rates updates…

Tamilnad Mercantile Bank – 10.00 – Indian Private Sector Bank.
IDBI Bank – 9.50 – Public Sector Bank.
State Bank Of Travancore – 9.50 – Public Sector Bank.

Reply

Yash January 28, 2012 at 5:06 PM

hi,
I want to invest 70k to save tax. Which one is better NSC or PPF or fixed deposit. What is the duration of each one and which is a better option please let me know as i am doing it for the first time.

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K V Subba Rao September 20, 2012 at 4:29 PM

For persons having more than 15 years of left over service, I opine PPF is suitable. For comparative features of various tax savings schemes, you may search with aid of google.

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anant January 29, 2012 at 12:44 PM

hi, karnataka bank offers 9.5% as KBL tax planner

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anant January 29, 2012 at 12:47 PM
sunieta February 1, 2012 at 6:17 PM

None of the banks are benefitting Indian customers with hi interest rates that they pay to NRE deposits…. Most of them pay 10-10.5% to NREs but not for resident indians. Dont understand this at all… I heard some of NRIs are taking loans in their country and placing NRE deposits to earn better returns and pay back the loan as well

I contacted LVB lakshmi vilas bank and found they are encouraging FDs > 10 lakhs at 10.5% interest rate

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NAREN February 7, 2012 at 5:25 AM

Pl let me know whether interest accrued on Tax saver bank FDs are deemed as reinvested in subsequent years
in bank tax saver FD or no

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K V Subba Rao September 20, 2012 at 4:23 PM

No. Such provision is available for NSC only

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Raja Shekar February 8, 2012 at 11:52 AM

Kotak bank is not paying 9.25 % on tax saver fixed deposits.
I have opened a FD on 3rd, Feb, 2012, they are paying only 9.00 %.

Reply

Ramesh Alagarsamy February 10, 2012 at 6:42 PM

Hi all,
LVB Lakshmi vilas bank offers good tax saver fixed depostit.
For more information check the below link.
http://www.lvbank.com/ltsd.aspx

Reply

K V Subba Rao September 20, 2012 at 4:21 PM

LVB is allowing is allowing 9.75 % on Tax Saver Deposit for Sr Citizens whereas IDBI Bank is allowing 10 %

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Magic Axis February 15, 2012 at 11:24 AM

Hi ,,

AXIS Bank website shows 80C Tax Saver FD rate as 8.25% only.

Reply

afrah February 15, 2012 at 5:00 PM

‘Today you deposit Rs 10,000 in a 5 year fixed deposit with the State Bank of India. You shall earn compond interest rate of 6 per annum on your deposit. How much amount will you receive after 5 years?

Reply

K V Subba Rao September 20, 2012 at 4:17 PM

Rs 10000 plus Rs 3469 Interest. See the Calculator in http://allbankingsolutions.com/fdcal.htm

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karthik February 24, 2012 at 6:56 PM

hi,

i want to invest 1cr in fd. should i invest in one bank or few more banks to redeuce the tax and for some other IT problems?

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rajas March 1, 2012 at 11:33 PM

whther tamilnad mercantile bank tax saving fd rate is high or any other bank

Reply

rajas March 1, 2012 at 11:47 PM

which bank offer high rate for tax saving fds

Reply

Harsha March 2, 2012 at 11:28 AM

Hi,

I want to invest 3 lacs FD for 10 years in SBI. Should i pay any tax at maturity value? or on interest earned? If yes how much is excepted and how much will be taxed?

Thanks in advance

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DHANANJAYAN March 2, 2012 at 4:00 PM

FD more than 5 yrs, will be exempted under tax.

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Harsha March 2, 2012 at 4:20 PM

some sites saying u need to pay tax for the interest earned for 10years FD …that is 30% or 10% TDS…is it correct??? can u please confirm it…

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Umesh March 3, 2012 at 11:39 AM

Hi

Any interest earned from a bank instrument is taxable, even a rupee earned in a saving account is taxable and FD is no exception. The interest earned will be included in your income and taxed as per your slab. For FD, the interest earned is also subject to TDS as per rules.

Only principal amount of 5 year TAX SAVER FD (Please note TAX SAVER FD and not normal FD) is qualified for deduction under 80C subject to a limit of Rs 1,00,000 including other investments, if any. Please note that even in TAX SAVER FD interest earned is taxable.

@ Dhanjayan
I hope this also clears your stand.

Thanks

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DHANANJAYAN March 5, 2012 at 10:07 AM

HI Umesh,

thanks for the info. i meant to say the same, but was not in-detail. Anyway, thanks.

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Nisarg Mistry July 14, 2012 at 2:02 PM

if even in TAX SAVER FD interest earned is taxable.
than what is the advantage over normal FD.

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Umesh July 15, 2012 at 2:33 PM

Hi Nisarg
It seems you have not read the above paragraphs, that why you are asking this question.
Don’t you find any difference in investing TAX SAVER FD and NORMAL FD.
Read it again, and if you did not get your answer, ask again. I will answer.

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Manshu July 17, 2012 at 5:06 AM

Why so harsh Umesh? 🙂

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Manshu July 17, 2012 at 5:09 AM

Because the principal gets reduced from your taxable income and that reduces your tax liability.

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ravi March 16, 2012 at 1:15 PM

I want to invest on tax saving fixed deposits,
Is it possible to withdraw the money for any urgent reason within 5yrs. in any bank.

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Priya March 16, 2012 at 3:37 PM

Hi!

I have invested some amount on a tax saver fixed deposit .Can I submit form 15g to avaoid TDS ?

Regards,
Priya

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Manshu March 19, 2012 at 4:06 AM

Priya you can only avoid TDS by furnishing this if you aren’t liable to pay any tax, i.e. your tax liability is nil for the year. Is that applicable to you?

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sherbin March 31, 2012 at 4:30 PM

hi,
I have invested in sbi tax saver FD for 5 years, is it possiblefor me to withdraw the money partial/full after one or two years or before 5 years if needed.
can any one get me a good advice.
thanks

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Umesh April 1, 2012 at 1:19 PM

NO. You can not.
For a good advice you better contact your bank.

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Debjani May 8, 2012 at 1:21 PM

Hi,
Your page reports that SBT has a interest rate of 9.5%, but when I follow the SBT link the SBT webpage mentions the interest rate on FD of 5 year period as 8.75%. Can you please help me clarify my doubt?

Warm regards,
Debjani.

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Manshu May 8, 2012 at 6:17 PM

Debjani – Sorry about that – it seems that I need to update this page as the source of the information is the bank’s website and the rates that you see there are the correct ones.

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R H Somani July 5, 2012 at 8:46 AM

Tax saving deposit in bank .No mention of number of days or years to invest in this scheme
against interest rates. Which may be clarified .So that investor can plan to avail tax saving deposit in Banks.
R H Somani.

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Umesh July 5, 2012 at 5:47 PM

Tax Saver FD is a 5 year deposit. You must mention at your bank for TAX SAVER FD and not 5 year FD as 5 year FD is not a tax saver instrument only 5 years TAX SAVER FD is.

Normally banks give less interest in comparison to regular 5 year FD. The interest is taxable like regular FDs

There are certain limitations with this FD like you can not avail a loan etc, you can not fully/partially withdraw any amount, during these 5 years

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Harinathan.K August 6, 2012 at 8:46 AM

As per latest ICICI Bank website Interest Table. Tax Saving FDs of 5 years duration carry 9.5%

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Support August 17, 2012 at 9:00 PM

Hi Manshu,

Very informative,
Can i know the best recurring deposit interest rates in india

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vijay nagendra August 22, 2012 at 2:08 PM

Oriental Bank of Commerce is giving 9.75% p.a.(quarterly compounding) interest rate to normal citizens on tax saver fixed deposits. I think this information is not reaching the public properly.

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Harinathan.K August 26, 2012 at 5:18 PM

What are the options available for Safe investment which give returns over 12%pa

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Anusha Shashidhar September 10, 2012 at 12:07 AM

Manshu, can a person use a regular FD account for tax savings? Or is it essential that s(he) use a Tax Saver FD to save tax?

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Manshu September 10, 2012 at 12:10 AM

No, you need a tax saver FD with a 5 year lock in to benefit from the tax saving clause else not.

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K V Subba Rao September 20, 2012 at 4:10 PM

For Sr Citizens, IDBI Bank is allowing 10 % for Tax Saver Deposits. To my knowledge, this is the highest rate of interest

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giri prasad November 17, 2012 at 11:42 PM

Hi

I like invest money of 1 lakh as a single time in order to get tax benefit from both 80c & 10(10)D.

I can wait for the tax free returns on my 1 lakh investment.

I heard that there are some MF’s that give both 80C & 10(10)d facility. can any one help me in this.

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rahul January 17, 2013 at 1:42 PM

thanks for the update 2013

bless u ur articles r helping a lot of people 🙂

i am a stock market trader and i am in losses … in pursuit for financial stability suppose i put 40Lakh in union bank

since my income is negative and i belong to zero tax slab … is it possible that i can have whole 9.5% full interest without paying taxes ???

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Umesh January 17, 2013 at 11:46 PM

Yes You Can. In your case,
1. If you are in very senior citizen category, whole interest amount is tax free.
OR
2. If you are a senior citizen, avail 80C deductions, medical/health insurance, and if paying housing loan interest.
3. Similarly for general category.

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rahul February 2, 2013 at 11:49 AM

thnks

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Umesh January 17, 2013 at 11:52 PM

As you said, you are in loss in stock market, as trader.
Was it in previous years also.
Have you filed your ITR in time.
Do you have any such carried forward losses.
Then check if you can adjust previous years losses with this years income. Check whether you can adjust such carried forward losses with interest income. (as interest income falls in “income from other sources”)

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bhanu kiran January 18, 2013 at 10:52 PM

Hi all,
I took loan on my credit card of 56000 at 14.4% per annum (1.2%pm)
Monthly installments range from 5600-5500 for 12months, which means for 56000 i need to pay 61000. Actually i planned this amount for purchasing bike and later cancelled that plan due to unavoidable reason. Now im unaware of what to do with this amount. I need all ur suggestions what will be good if im investing this amount.

According to me…
Option 1:
Im taxpayer, for this year im paying around 10k as tax after all the savings that i have done for this year.
So i can go for tax saver FD and claim tax of 5k directly on 50000.
and at rate of 9% i can get 4500 as interest per year..
The only Con is lock in is 5years..

I need all your suggestions what kind of investment you think is good and will provide me good returns.

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Narayana January 23, 2013 at 3:15 AM

hi,
I have Tax saver FD in Corporation Bank for 1 lakh for 5 years. Just wanted to know if I can show this for tax exemption for 5 financial years or it can be shown for tax exemption for that particular financial year in which its taken. Thanks

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Manshu January 23, 2013 at 6:40 AM

You have to invest every year to take advantage of the tax gain Narayana.

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sanoj February 4, 2013 at 12:10 PM

hi,
Interest Rates On Tax Saver Deposits in Axis bank is @ 9% p.a (w.e.f January 09, 2013) were as its is shown here as 8.25%. Please confirm it.

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Jyotindra verma September 7, 2013 at 2:51 PM

There r other banks offering better interest rates on 5 years tax saving (80c) FD plan. Abhyudaya coop offers 9.75 & HDFC offers 9.25. Pl check if my info is correct & then append your list….. Regards, Verma

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Tushar January 21, 2014 at 4:37 PM

Hi,

Can I invest money in NSC online ?

Tushar

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Anugya July 14, 2014 at 8:47 PM

I am working aboard and planing to invest INR 1000000 in regular 2year FD at an interest rate of 9.00% in my bank account in India.
I am not earning anything in INR. What would be my taxable income and what would be my tax structure look like ? Do I need to pay taxes every year or only in the mature year?

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raj August 23, 2014 at 5:27 PM

i want 50000 rs invest for tax saving 2014-15. kis prakar jama karvau. tell me

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