Tax Saving Fixed Deposit: Fixed deposit schemes in banks or post offices act as a permanent instrument for investors who have low risk appetite. While many Indians are now looking to more unconventional ways to invest like stocks and cryptocurrencies, others, especially in the senior age group, are more satisfied with traditional methods of savings that will provide guaranteed returns without any financial risk. This is a major reason why Fixed depositor FD, remains one of the most popular investment options in India for decades.
What is Tax Saving Fixed Deposit?
It is one of the most popular investment options for those who want to invest in risk-free assets and still enjoy the benefits of income tax deduction. Tax Saving FD All are offered by banks, and a . come with fixed rate of interest, while allowing consumers to save on income tax. If one invests in tax saving fixed deposits, he/she will get tax exemption of up to Rs 1.5 lakh under section 80C of the Income Tax Act. As per the income tax bracket of the investor, only interest earned from fixed deposits will attract Tax Deduction at Source (TDS).
Tax Saving FDs for Senior Citizens
Tax saving FDs are considered to be one of the best savings options for senior citizens, who are offered high interest rates. While investing in tax saving FDs, a normal investor can submit Form 15G while senior citizens can submit Form 15H to avoid this deduction. In addition, senior citizens can also claim deduction up to Rs 50,000 on interest earned under section 80TTB. This is especially beneficial for senior citizens who are offered higher interest rates on bank FDs.
These FDs have a minimum lock-in period of five years and the interest earned on them is taxed as per the tax bracket of the investor. If the investment is made jointly, then only the first holder listed on the FD receipt will be eligible for tax benefits. In case of tax saving FDs, premature withdrawal is not allowed as their tenure varies between five and 10 years.
Top 10 Banks with Highest Return on Tax Saving FDs below Rs 2 Crore (as on June 6, 2022)
Suryoday Small Finance Bank: Interest rate per annum – 7.25 percent
AU Small Finance Bank: Interest rate per annum – 7.25 percent
Ujjivan Small Finance Bank: Interest rate per annum – 7.10 percent
DCB Bank: Interest rate per annum – 7.10 percent
Yes Bank: Interest rate per annum – 7.00 percent
IndusInd Bank: Interest rate per annum: 7.00 percent
RBL Bank: Interest rate per annum – 6.80 percent
IDFC First Bank: Interest rate per annum – 6.75 percent
axis Bank: Interest rate per annum – 6.50 percent
Equitas Small Finance Bank: Interest rate per annum – 6.50 percent
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