Updated on Feb 27 2011.
Since weâ€™ve had so many posts on bonds and tax saving instruments in the past few days I thought Iâ€™d keep the momentum going and write about tax saving fixed deposits in India today.
A tax saving term deposit has a tenure of 5 years, and a lot of banks offer these. They save tax because they reduce your taxable income when you invest in them up to a cap of Rs. 1 lakh, and come under Section 80C.
The interest earned from these fixed deposits is taxable, and tax will deducted at source as applicable.
These term deposits canâ€™t be encashed before the expiry of 5 years, and you canâ€™t pledge them to get any loans also.
Here is a list of some banks which offer these deposits along with the prevailing interest rates applicable as at November 3rd 2010. Â If you see any mistakes, want to add any other bank or have anything else to say â€“ please leave a comment.
|3||Bank of Baroda||8.50%|
|4||Bank of Maharashtra||8.30%|
|6||Central Bank of India||8.85%|
|11||Indian Overseas Bank||8.10%|
|13||Karur Vysya Bank||9.00%|
|15||Punjab National Bank||8.50%|
|16||Punjab and Sind Bank||8.50%|
|17||South Indian Bank||8.75%|
|18||State Bank of Hyderabad||8.75%|
|20||State Bank of Travancore||9.00%|
|23||Union Bank of India||8.50%|
|25||City Union Bank||9.50%|