Tax Saver Fixed Deposits with High Interest Rates

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.


144 thoughts on “Tax Saver Fixed Deposits with High Interest Rates”

  1. 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?

  2. 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

  3. 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.

  4. 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

  5. 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.

  6. 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”)

  7. 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 ???

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

  8. 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.

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

  10. 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?

  11. 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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