Tax Saving Fixed Deposits in India

Updated on Feb 27 2011.

Since we’ve had so many posts on bonds and tax saving instruments in the past few days I thought I’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 can’t be encashed before the expiry of 5 years, and you can’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.  If you see any mistakes, want to add any other bank or have anything else to say – please leave a comment.

S.No. Bank Interest Rate
1 Axis Bank 8.25%
2 Allahabad Bank 8.00%
3 Bank of Baroda 8.50%
4 Bank of Maharashtra 8.30%
5 Canara Bank 8.75%
6 Central Bank of India 8.85%
7 HDFC Bank 8.25%
8 ICICI Bank 8.75%
9 IDBI Bank 8.75%
10 Indian Bank ?
11 Indian Overseas Bank 8.10%
12 J&K Bank 8.50%
13 Karur Vysya Bank 9.00%
14 Kotak Bank 9.25%
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%
19 SBI 8.50%
20 State Bank of Travancore 9.00%
21 Syndicate Bank ?
22 UCO Bank 8.00%
23 Union Bank of India 8.50%
24 Vijaya Bank 8.25%
25 City Union Bank 9.50%
26 Indian Bank 9.00%

Click here to see the interest rates comparison on regular fixed deposits.

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