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    Tax Saver FD Interest Rates Comparison

    Tax saver fixed deposit (FD) is a type of fixed deposit, by investing in which, you can get tax deduction under section 80C of the Indian Income Tax Act, 1961. Normally, tax saver deposits are of two types - “Single holder Type Deposits" and “Joint holder Type Deposits”. Such deposits are offered for a lock-in period of 5 years. Any investor can claim a deduction of a maximum of Rs.1. 5 lakh by investing in tax saver fixed deposits.

    Tax Saver Fixed Deposits Interest rate comparison

    Given below is a clear comparison of interest rates of the top 5 Bank’s Tax Saver Fixed Deposit schemes in India for 2018:

    Bank General rate of interest (per annum) Rate of interest for senior citizens (per annum)
    ICICI Bank 6.50% 7.00%
    Axis Bank 6.25% 6.50%
    SBI 6.25% 6.50%
    HDFC Bank 6.00% 6.50%
    Citibank 5.00% to 5.25% 5.50%

    *The rates are subject to change without prior notice. The customers are requested to contact the respective bank for the revised rates.

    Given below is a clear comparison of interest rates of the Highest Paying Tax Saver Fixed Deposit schemes in India 2018:

    Bank General rate of interest (per annum) Rate of interest for senior citizens (per annum)
    Suryoday Small Finance Bank 7.25% to 7.75% 7.50% to 8.00%
    AU Small Finance Bank 7.25% to 7.40% 7.75% to 7.90%
    IDFC Bank 7.20% 7.70%
    Ujjivan Small Finance Bank 6.50% to 7.00% 7.00% to 7.50%

    *The rates are subject to change without prior notice. The customers are requested to contact the respective bank for the revised rates.

    Key highlights of Tax Saver FDs:

    • Maturity period of a tax saver FD is 5 years.
    • Get tax deduction up to Rs.1, 50,000.
    • Deduction is available to individuals, members of Hindu undivided family (HUF), senior citizens and NRIs.
    • The interest earned from tax saver fixed deposits is taxable. Tax will deducted at source.
    • Premature withdrawal is not available.
    • You cannot get loan against tax saver fixed deposits.
    • Tax saver deposits can be opened both singly and jointly. In case of a joint account, tax benefit will be availed by first holder of the deposit as per the section 80C of the Income Tax Act, 1961.

    Tax Deductible on Fixed Deposits

    As per current tax laws an individual can claim a tax deduction for investments in tax saving fixed deposits of up to Rs.1.5 lakh. The amount will be deducted from the total gross income of the individual to arrive at the taxable income. Section 80C of the Income Tax Act permits this deduction. Listed below are some criteria to be fulfilled to claim for this deduction:

    • Hindu United Families (HUF) and individuals only are eligible to invest in tax saving fixed deposit schemes.
    • The Fixed Deposit can be of the minimum amount as stipulated by the bank.
    • The tax saving fixed deposits have a 5-year lock-in period. Premature withdrawals and and loans against the Fixed Deposit is not permitted.
    • Individuals may invest in these Fixed Deposits through any private or public sector banks, except co-operative and rural banks.
    • The Post Office Time Deposit of 5 years also qualifies for deductions under Section 80C of the Income Tax Act of 1961.
    • Post Office Fixed Deposits are transferable between post offices.
    • Fixed Deposits can be held either individually or jointly. In case of a joint fixed deposit the tax benefit will be given to the first holder of the Fixed Deposit.
    • Interest earned on these Fixed Deposits is taxable under the investor’s tax bracket, therefore, Tax Deductible at Source (TDS) is applicable. The interest payable on the investment is either on a monthly basis or quarterly basis, this interest may be reinvested.
    • Tax Deductible Fixed Deposits have a nomination facility.
    • Banks offer slightly higher interest rates to senior citizens on these Fixed Deposits. This increased interest rate exists for Tax Saving Fixed Deposits.

    Benefits of investing in Tax Saver FDs

    Tax saver fixed deposits come with a number of benefits which include:

    • The major benefit of investing in tax saver fixed deposit is that it helps you save income tax.
    • You can start investing with as little as Rs.100 and add to your savings.
    • Since premature withdrawal is not available in case of tax saver fixed deposits, you can be sure of receiving assured returns, apart from saving tax.
    • Nomination facility is available. You can nominate/authorize someone to withdraw your deposit before or post maturity in the event of your death.

    How to Avoid TDS on FDs

    Tax Deducted at Source (TDS) is applicable to all interest income that is earned in India, including Fixed Deposits (FDs). A TDS deduction is made as per the prevailing income tax rules. While it is a crime not to pay tax of FDs, some wise financial planning will go a long way in helping depositors paying unnecessary tax and penalties. Let us understand more about how to avoid TDS on FDs and do better tax planning when it comes to FDs. First of all, it is important to know that in every financial year if the income earned through interest exceeds Rs.10,000, the applicant or account holder will have to pay tax at any cost. However, if the interest earned is less than Rs.10,000, then the account holder will not have to pay tax.

    • Self-declaration: If the interest earned from FDs and the total taxable income earned during the financial year is not more than the prescribed taxable limit, please submit form 15G or 15H, whichever is applicable. These forms should be duly filled in, signed and then submitted to the bank to make sure TDS is not deducted from the interest income that is earned on FDs. However, please note that under any circumstances if the interest earned is eligible for tax deduction, then, even if the above forms are submitted, the tax will be deducted and the forms will be considered void. It is also possible to fill and submit these forms online without any hassle and most banks in India offer this facility. To be eligible to apply for self-declaration using these forms the total interest income earned must not exceed Rs.10,000 per annum.
    • Which form is for whom? There is always a confusion regarding form 15H and form 15G. Form 15H is for senior citizens, while the latter is for others. Form 15G can be filled by individuals or a Hindu Undivided Family. The applicant must be a resident of India who is 60 years or less and his/her income should not exceed the prescribed tax limit. Form 15H can only be filled by an Indian resident who above 60 years of age and by an individual who falls below the prescribed tax limit.
    • Managing investments better: Sometimes, when it comes to making wise financial decisions, timing is everything. In the case of FDs, if one can make investments in such a manner that it does not exceed Rs.10,000 in one year, then it will be the best option. For example, one could invest in a 1-year fixed deposit in the month of October, in such a case, the financial year will be split into two. This is because the financial year comes to an end by March 31. This is one of the options that FD investors have in order to save TDS.
    • The second applicant waived off TDS? If you are the first applicant in a joint FD, then TDS will be deducted from your account automatically if the interest income earned exceeds the limit. However, if you are the second applicant in a joint account, then TDS is not likely to be deducted. It helps to make a note of this point before opening a joint account.
    • Distributing investments: Another option that investors have is to distribute investments across various banks, instead of putting it all in one bank.
    • PAN: The interest earned on all FDs are fully taxable and if the interest income exceeds Rs.10,000, TDS will be levied at the rate of 10%. Please note that it is very important for the FD account holder to furnish his/her Permanent Account Number (PAN) details, then banks will deduct TDS at a higher rate, which is usually 20%.
    • Late submission: In case a person has forgotten to fill in and submit the self-declaration forms, there is no need to fret. In such a case, even if the TDS deduction has already been made, the Income Tax department will make a refund, if the account holder files for tax returns. This can be done every financial year without any hassle. The only disadvantage of this method is that the account holder has to wait for a long time to receive his/her refund. The account holder will have to wait until the next July and for the refund to be processed it will take another few months.

    FDs still remains one among the most preferred investment options because they offer certain guaranteed returns without any financial risk element. It is very important to take all necessary steps to do tax planning and better manage your investments instead of paying hefty taxes. Other than the methods mentioned above if one makes other investments, one can claim tax exemption, and this will help reduce the tax burden on the individual to a certain extent.

    Who is eligible to open a Tax Saver FD?

    • All resident individuals with a pan card.
    • Non–resident Indians (NRIs).
    • Senior citizens above the age of 60 years are eligible to open a tax saver fixed deposit account.

    Things To Know About Tax Saving Fixed Deposits

    As per current tax laws, if one invests in a tax saving FD, he/she can claim the invested amount up to a maximum of Rs 1.5 lakh as a deduction from his/her income. The amount invested this way is meant to cut from gross total income to arrive at taxable income. This kind of deduction is permitted under Section 80C of the Income Tax Act. Section 80C further determines the upper-limit of investment – which is currently fixed at Rs 1.5 lakh. The Tax-saving fixed deposit is one of the few gateways presently permitted for investment for one to claim a tax break according to Section 80C of the Income Tax Act.

    Only Individuals and HUFs can make investments in the tax saving fixed deposit (FD) scheme. This FD can be put together with a certain minimum amount - and this amount varies from one bank to another. Fixed deposits have a lock-in time of 5 years, and withdrawals before maturity are not permitted, as are not loans against these FD's.

    One can invest in these FD's via any of the public or private sector banks, but not cooperative and rural banks. An investment made in the Post Office Time Deposit for a period of 5 years also qualifies one for deduction under the same section 80(C) of the Income Tax Act, 1961. This Post Office Fixed deposit comes with the provision of being transferable from one Post office to another.

    Customer Reviews

    • ICICI Bank Fixed Deposit
      "Good Investment Plan"
      0.5 4.0/5 "Great!"
      I have taken fixed deposit account in ICICI Bank . They are not charging any charges for the account . I used to get income tax benefits . Am satisfied with the customer service and response.They are giving good rate of interest . Overall am happy with my account .
      Was this review helpful? 1
      , hyderabad
      Reviewed on Oct 06, 2018
    • review Fixed Deposit
      "Good service"
      0.5 4.0/5 "Great!"
      The benefits are good from the RELIANCE company mutual funds , the investment has better turn over and it is called benefit to reduce the tax. I hold the mutual funds from the reliance for more than a year and I would say it is good to have the mutual fund with the RELIANCE company.
      Was this review helpful? 0
      , lucknow
      Reviewed on Jun 01, 2018
    • SBI Fixed Deposit
      "Good Service"
      0.5 4.0/5 "Great!"
      I've a savings account with SBI. I started a Fixed Deposit with them. I started the FD for tax saving purposes. They do charge some normal annual interest rates of fixed deposit also I had never experienced any difficulty with their services.
      Was this review helpful? 8
      , chennai
      Reviewed on May 21, 2018
    • review Fixed Deposit
      "Best for investment"
      0.5 4.0/5 "Great!"
      My entire family is having membership account with Nutan Nahari Sakari Bank. It is a local bank. Earlier I had invested 4 to 5L in it and later it was broken and currently I had invested around 60K to 70K. They are offering good interest. For any query I had to visit the branch. I am getting tax benefits as well.
      Was this review helpful? 2
      , new delhi
      Reviewed on Feb 02, 2018
    • Canara Bank Fixed Deposit
      "3 years old"
      0.5 3.0/5 "Satisfactory"
      This has been good Bank that I have number of relationship with. I started with a Saving Accounts with them, followed by this Fixed Deposit. The Interest rate of 6.5% is not high, but a an alright one. I also have a Credit Card with them on the basis of this account,
      Was this review helpful? 4
      , new delhi
      Reviewed on Nov 25, 2017
    • ICICI Bank Fixed Deposit
      "Great banking service"
      0.5 5.0/5 "Blown Away!"
      Totally I have 3 Fixed Deposit accounts with ICICI Bank. I am surprised where I can close my account by using online service. The interest rate was almost same like other public sector banks. No tax benefits, which are regular once here. I got a bonus points and very much happy with ICICI Service.
      Was this review helpful? 3
      , hyderabad
      Reviewed on Nov 18, 2017
    • Axis Bank Fixed Deposit
      "Good service"
      0.5 4.0/5 "Great!"
      Even though I don't like the saving account with Axis bank as there is a minimum balance of Rs. 10000 has to be maintained I like the fixed deposit account with Axis bank as that process is simple and smooth and I have it for 2.5 years and also they pay good interests rates of 7.5%.
      Was this review helpful? 3
      , faridabad
      Reviewed on Nov 17, 2017
    • SBI Fixed Deposit
      "Fixed deposit"
      0.5 4.0/5 "Great!"
      SBI Fixed Deposit is the first thing that I would look out for, we can book the FD online, I even get the FD bond online it is created automatically too . They provide the best rate in the industry . Further more , we get the options to change the maturity instructions online too. Not sure about the tax benefit. When I placed a request for liquidation, I got my funds back immediately and this FD was opened a couple of years back.
      Was this review helpful? 3
      , bangalore
      Reviewed on Nov 14, 2017
    • HDFC Bank Fixed Deposit
      "Fixed deposit"
      0.5 5.0/5 "Blown Away!"
      HDFC Fixed Deposit is good, as every one can invest in FD the interest rate at that time was 6.5% for a short tenure. I am pretty sure for the long tenure they will provide tax benefits. I had placed a request for this FD through online through my account i can view my maturity information online. I remember placing a request for change of nominee online once.
      Was this review helpful? 2
      , bangalore
      Reviewed on Nov 10, 2017
    • HDFC Bank Fixed Deposit
      "FD account"
      0.5 5.0/5 "Blown Away!"
      HDFC FD is really good, I have got a competitive interest rate also everything is prefect here. I am not getting tax benefit, but I am holding this FD for a period of 2 to 3 months. No compliments were offered. I had placed a request for the FD online and the interest rate is 6.75%.
      Was this review helpful? 0
      , bangalore
      Reviewed on Sep 29, 2017
    • IndusInd Bank Fixed Deposit
      "Fixed depost"
      0.5 5.0/5 "Blown Away!"
      With INDUDIND, I am holding a NRE so based on which they offered a NRE rate. This was opened and closed. This request was placed online no challenges nor any issues. I did not get any tax benefit for this FD. It was opened on the basis of NRE....
      Was this review helpful? 1
      , thane
      Reviewed on Sep 23, 2017
    • ICICI Bank Fixed Deposit
      "FD online"
      0.5 5.0/5 "Blown Away!"
      I can book Fixed Deposit online using ICICI Bank account it is very easy to do the same . I am holding RD account with ICICI for the past 4 years. I do get some tax benefit here. I do have options online for breaking FD.
      Was this review helpful? 0
      , ghaziabad
      Reviewed on Sep 12, 2017
    • ICICI Bank Fixed Deposit
      "Great Job"
      0.5 5.0/5 "Blown Away!"
      I am having fixed deposit account with the ICICI bank and the rate of interest is around 6.5%, also am not looking the interest rate to compare with other bankers. Customer service is fine one for me and the response is good, also the tax is applicable on the returns.
      Was this review helpful? 0
      , bangalore
      Reviewed on Aug 21, 2017
    • SBI Fixed Deposit
      "Good FD process"
      0.5 5.0/5 "Blown Away!"
      I am very much comfortable with the FD PROCESS followed by SBI . All I had to do is, I have to just go online and place a request for FD. The information about the FD interest rate are also available online and it is very easy to find that too. No tax benefits and any time i can liquidate the funds by breaking the funds online , the same is not the case with other banks where there would be charge else it would be done the next day with SBI it is done on the same day and that is the biggest advantage here.
      Was this review helpful? 0
      , bangalore
      Reviewed on Aug 16, 2017
    • Punjab National Bank Fixed Deposit
      "Scheme is good"
      0.5 5.0/5 "Blown Away!"
      PNB Fixed deposit scheme is very good, yes it is a good bank. I am using this bank account for about 15 years . My parents are holding an account there which prompted me to open this account with this bank, it is a reputed bank too so I had taken FD from this bank. Interest rate 9%for FD and I do get tax benefit from this FD
      Was this review helpful? 1
      , new delhi
      Reviewed on Aug 11, 2017
    • Karur Vysya Bank Fixed Deposit
      "Good"
      0.5 3.5/5 "Pretty good"
      I am having the fixed deposit account with the Karur Vysya bank and the account got opened within one to two days of time. Tenure is for five years of time and after that it will be get matured. Rate of interest was around 8.5% to 9% on that time with the tax redemption.
      Was this review helpful? 3
      , hyderabad
      Reviewed on May 23, 2017
    • SBI Fixed Deposit
      "Average "
      0.5 1.0/5 "Really Bad"
      I had invested in fixed deposit with the State bank of India and the interest rate is very less like its around 7.15%, also the returns are also very less, which will be also applicable with the tax. Services provided by them is really not good and I would like to suggest that they need to provide the customer service in a much better way.
      Was this review helpful? 5
      , bhopal
      Reviewed on May 03, 2017
    • Kotak Fixed Deposit
      "Customer centric"
      0.5 4.0/5 "Great!"
      I do have fixed deposit account with the Kotak mahindra bank and I have done it for tax saving purpose and the account on time because I can even open this account through online itself. Interest rate is around 7.25% per annum for my deposit, also it will compounded quarterly, so the interest will be huge. Online banking services are really working good and there are not much hindrance over there.I can say they are user friendly, also I been allocated with the seperate relationship manager, which really isolated from the traditional customer service practice.
      Was this review helpful? 4
      , bangalore
      Reviewed on Feb 05, 2017
    • UCO Fixed Deposit
      "FD account"
      0.5 5.0/5 "Blown Away!"
      I am using UCO bank FD. I dont get any tax benefits here. The rate of interest is 9.75% which is applicable for me . ( Normal interest + the staff rate is 1%) therefore I had been offered 9.75% interest rate. For a normal customer interest rate on FD is 8.25% and for senior citizen they are offering around 8.75%.
      Was this review helpful? 10
      , indore
      Reviewed on Dec 03, 2016
    • SBI Fixed Deposit
      "SBI is a very good provider"
      0.5 5.0/5 "Blown Away!"
      Rate of interest offered by SBI fixed deposit is very much satisfactory. Their staffs are very much cooperative . I hold a savings account with the said bank based on which they had offered this FD. Interest rate offered by them was 9.8% and they are providing tax benefits too.
      Was this review helpful? 24
      , guntur
      Reviewed on Nov 29, 2016
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