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.

 

Views: 113865


Get free daily updates in your email:






{ 140 comments… read them below or add one }

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

Reply

DHANANJAYAN March 2, 2012 at 4:00 pm

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

Reply

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…

Reply

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

Reply

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.

Reply

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.

Reply

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.

Reply

Manshu July 17, 2012 at 5:06 am

Why so harsh Umesh? :-)

Reply

Manshu July 17, 2012 at 5:09 am

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

Reply

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.

Reply

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

Reply

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?

Reply

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

Reply

Umesh April 1, 2012 at 1:19 pm

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

Reply

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.

Reply

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.

Reply

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.

Reply

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

Reply

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%

Reply

Support August 17, 2012 at 9:00 pm

Hi Manshu,

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

Reply

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.

Reply

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

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

Reply

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?

Reply

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.

Reply

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

Reply

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.

Reply

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 ???

Reply

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.

Reply

rahul February 2, 2013 at 11:49 am

thnks

Reply

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”)

Reply

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.

Reply

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

Reply

Manshu January 23, 2013 at 6:40 am

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

Reply

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.

Reply

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

Reply

Tushar January 21, 2014 at 4:37 pm

Hi,

Can I invest money in NSC online ?

Tushar

Reply

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?

Reply

raj August 23, 2014 at 5:27 pm

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

Reply

Leave a Comment

{ 4 trackbacks }

Previous post:

Next post: