Highest Interest rate on Tax saving FD:If you want to keep your money safe as well as save tax, then investing in tax saving fixed deposits (FDs) can be a better option. This is such an investment option in which the investor not only gets guaranteed returns but also gets tax exemption under Section 80C of Income Tax. This rebate is given on investment up to Rs 1.5 lakh during a financial year. Tax saving FD is like normal fixed deposits, but investors also get tax benefits in it.
The money you invest in these fixed deposits is eligible for tax deduction up to Rs 1.5 lakh. This means that your taxable income reduces. However, it is worth noting that in tax saving FD, investors’ money remains locked for 5 years. This means that you cannot withdraw your money during this period.
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Interest rate and lock-in period
Interest rates on tax saving FD vary from bank to bank and usually range between 6% to 7.5% per annum. These rates depend on the bank and current market conditions. Senior citizens i.e. people above 60 years of age often get higher interest, which is 0.50% more than the common people. In such a situation, it is important to compare the rates offered by different banks to increase your returns.
It is worth noting that the lock-in period of tax saving FD is five years. That is, unlike other fixed deposits, investors cannot withdraw money from tax saving FDs before nor can they take any loan against them. Lack of liquidity is an important factor in this, especially if you think that you may need your money during the next 5 years, then this aspect should be considered before investing.
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Investment limits and flexibility
The minimum amount to invest in a tax saving FD is usually Rs 1,000, and the maximum investment limit is Rs 1.5 lakh per financial year so that you can avail tax deductions. You can invest a lump sum or make multiple deposits within the financial year, provided the total amount does not exceed Rs 1.5 lakh. This is also an important aspect that you should consider while doing your financial planning so that you can avail maximum benefits under Section 80C.
Reinvest and interest rates
Banks usually give you the option to reinvest the interest earned on your tax saving FD. You can increase your income by doing this. You can take it regularly (monthly, quarterly, or annually) if you want, but remember that each interest payment will be taxable, which will increase your taxable income.
Tax saving FDs are a safe investment option for those who want to earn stable returns while saving tax. However, you should compare other investment options to decide whether tax saving FDs are right for your investment portfolio.
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In which bank is the highest interest available on 5 year FD?
For your convenience, the interest rates on 5 year tax saving FD of more than 35 government, private and small finance banks have been compared in the list below. The names of all the major banks of the country like SBI, HDFC Bank, Axis Bank, ICICI Bank, BoI, PNB, Union Bank are also included in the list. You can compare the interest rates offered by these banks on tax saving FD and decide to invest.
| bank name |
5 year FD rate for common people (%) |
5 year FD rate (%) for senior citizens |
| SMALL FINANCE BANKS | ||
| AU Small Finance Bank | 7.25 | 7.75 |
| Equitas Small Finance Bank | 7.25 | 7.75 |
| ESAF Small Finance Bank | 6.25 | 6.75 |
| Jana Small Finance Bank | 8.20 | 8.20 |
| NorthEast Small Finance Bank | 6.25 | 6.75 |
| Suryoday Small Finance Bank | 8.25 | 8.75 |
| Ujjivan Small Finance Bank | 7.20 | 7.70 |
| Unity Small Finance Bank | 8.15 | 8.65 |
| Utkarsh Small Finance Bank | 7.75 | 8.35 |
| private bank | ||
| Axis Bank | 7.00 | 7.75 |
| Bandhan Bank | 5.85 | 6.60 |
| City Union Bank | 6.25 | 6.50 |
| CSB Bank | 5.75 | 6.25 |
| DBS Bank | 6.50 | 7.00 |
| DCB Bank | 7.40 | 7.90 |
| Federal Bank | 7.10 | 7.75 |
| HDFC Bank | 7.00 | 7.50 |
| ICICI Bank | 7.00 | 7.50 |
| IDFC First Bank | 6.75 | 7.25 |
| IndusInd Bank | 7.25 | 7.25 |
| Jammu & Kashmir Bank | 6.50 | 7.00 |
| Karur Vysya Bank | 7.00 | 7.40 |
| Karnataka Bank | 6.50 | 7.00 |
| Kotak Mahindra Bank | 6.20 | 6.70 |
| RBL Bank | 7.10 | 7.60 |
| SBM Bank India | 7.75 | 8.25 |
| South Indian Bank | 6.00 | 6.50 |
| Tamilnad Mercantile Bank | 6.50 | 7.00 |
| Yes Bank | 7.25 | 8.00 |
| government bank | ||
| Bank of Baroda | 6.80 | 7.40 |
| Bank of India | 6.00 | 6.75 |
| Bank of Maharashtra | 6.50 | 7.00 |
| Canara Bank | 6.70 | 7.20 |
| Central Bank of India | 6.50 | 7.00 |
| Indian Bank | 6.25 | 6.75 |
| Indian Overseas Bank | 6.50 | 7.00 |
| Punjab National Bank | 6.50 | 7.00 |
| Punjab & Sind Bank | 6.00 | 6.50 |
| State Bank of India | 6.50 | 6.50 |
| Union Bank of India | 6.50 | 7.00 |
| Interest rates as of 18th December 2024 | ||
,Note:5 The interest rate list of all banks for FD of the year has been prepared by Paisa Bazaar. The updates related to FD rates offered by the banks included in the list are till December 18. Banks keep changing their rates from time to time. In such a situation, investors are advised to get accurate information from their official website or branch before investing money in any bank FD scheme included in the list.
