Tax saver fixed deposit 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 maximum Rs.1, 50,000 by investing in tax saver 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:
Tax saver fixed deposits come with a number of benefits which include:
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.
There are many banks in India which offer tax saver fixed deposits for 5 years. Mentioned below is a number of top five Indian banks offering tax saver fixed deposits:
Given below is a clear comparison of interest rates of the top 5 Tax Saver Fixed Deposit schemes in India:
|Bank||Name of the Tax Saver FD scheme||General rate of interest||Rate of interest for senior citizens|
|Axis Bank||Axis Bank Tax Saver Fixed Deposit||7.25% per annum||7.75% per annum|
|ICICI Bank||ICICI Bank Tax Saver Fixed Deposit||7.50% per annum||8.00% per annum|
|HDFC Bank||HDFC Bank Tax Saver Fixed Deposit||7.50% per annum||8.00% per annum|
|SBI Bank||SBI Tax Saving Scheme 2006||7.00% per annum||7.25% per annum|
|IDBI Bank||Suvidha Tax Saving Fixed Deposit Scheme||7.50% per annum||8.00% per annum|
*The rates are subject to change without prior notice. The customers are requested to contact the respective bank for the revised rates.