Maximise Your Savings with Tax Saver Fixed Deposits

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A Tax Saver fixed deposit (FD) also known as is a type of fixed deposit specifically designed to help individuals save on income tax. Investors can deposit a lump sum amount for a fixed tenure, with a lock-in period of 5 years. The investment in such FDs qualifies for deductions up to ₹1.50 Lakhs under Section 80C of the Income Tax Act, 1961.

Tax Saver FD Interest Rates

Bank	Non-senior Citizen (p.a.)	Senior Citizen (p.a.)
SBI	6.50%	7.00%
ICICI Bank	7.00%	7.50%
HDFC Bank	7.00%	7.50%
PNB	6.50%	7.00%
Axis Bank	7.00%	7.75%
Bank of Baroda	6.50%	7.15%
AU Small Finance Bank	7.25%	7.45%
Ujjivan Small Finance Bank	7.20%	7.70%

Features and Benefits of Tax-Saving Fixed Deposit

Tax deductions

Enjoy deductions on investments up to ₹1.5 Lakhs under Section 80C of the Income Tax Act, 1961

Stable returns

Fixed and assured interest rates throughout the FD tenor, providing predictable returns.

Long-term savings

Mandatory lock-in period encourages disciplined savings for at least 5 years.

Financial security

Ideal for risk-averse investors seeking a secure investment option with tax benefits

Ease of investment

Simple application process and accessibility through various banks and financial institutions

No premature withdrawal

You cannot prematurely withdraw the sum in your deposit either partially or completely till the 5-year tenor is complete

Joint account holding

Tax-saver FDs also offer the option of joint account holding. However, note that the tax benefits can be availed only by the first or primary account holder.

Eligibility Criteria and Documents Required

The eligibility criteria and documents required for a tax saving FD may vary slightly between banks, but generally, they adhere to certain common principles.

1. Eligibility Criteria

Residential status - Resident Indians, including salaried and self-employed individuals
Age - At least 18 years old
Individuals and Hindu Undivided Families (HUFs)

2. Documents Required

Documents	Details
KYC documents	Identity proof Aadhaar card Passport Voter ID PAN card Senior-citizen identification card, if applicable Address proof Utility bills Driving licence Voter ID Aadhaar card Passport

Unlocking Tax Benefits with FDs under Section 80C

Invest Smartly

Explore the income tax benefits of Section 80C by channelling funds into a tax-saving fixed deposit, allowing you to invest up to ₹1.5 Lakhs

Dual Benefits

This investment scheme not only offers attractive returns but also guarantees capital protection, providing a secure financial avenue for your savings

Tax Considerations

While enjoying the advantages, be mindful that the interest income derived from the fixed deposit is subject to full taxation. Your tax liability hinges on your total income for the fiscal year and your applicable tax slab.

TDS Mechanism

Banks implement Tax Deducted at Source (TDS) if the interest accrued surpasses ₹40,000 in a fiscal year across all your accounts with the bank

Please note that the interest income will be classified under 'Income from Other Sources,' impacting your tax assessment accordingly.

How to Avoid TDS on FDs?

Avoiding TDS on fixed deposits involves strategic financial planning. Here are some strategies:

Submit Form 15G or 15H

You can submit Form 15G for individuals below 60 years or Form 15H for senior citizens to the bank to declare that your total income is below the taxable limit. This exempts you from TDS.

Distribute Investments

Distribute your investments across multiple banks or branches to keep the interest earned from each FD below the ₹40,000 threshold. This way, no single account will exceed the TDS limit.

Joint FDs

Consider opening joint FDs, especially with family members. The interest income will be attributed to both account holders, potentially keeping it below the TDS threshold.

Time Deposits Carefully

Plan the maturity dates of your FDs to ensure that the interest income in any given financial year remains below the ₹40,000 limit.

Comparison with other Tax-saving Investments

Investment	Lock-in period	Expected Returns
Unit-linked insurance plans (ULIPs)	5 years	Market-linked
National Pension Scheme (NPS)	Until retirement	Market-linked
National Savings Certificate (NSC)	5 years	7.70%
Sukanya Samriddhi Yojana (SSY)	21 years	8.00%
Public Provident Fund (PPF)	15 years	7.10%
Equity Linked Savings Scheme (ELSS)	3 years	Market-linked

In conclusion, tax saver fixed deposits serve as a prudent financial tool, combining the dual benefits of tax savings and capital protection. With a mandatory lock-in period of 5 years, these deposits provide a disciplined approach to wealth accumulation.

By understanding eligibility criteria, required documentation, and potential tax exemptions, investors can harness the advantages of tax saver FDs to build a secure financial foundation while optimising tax liabilities.

Disclaimer

The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort.

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products.

What happens to the amount when a tax-saving FD matures?

Once your tax-saving FD matures, the maturity amount, which includes the principal and the interest, is directly transferred to your linked bank account.

What are the risks associated with tax-saving FDs?

Market fluctuations do not impact the returns from a tax-saving FD, making them fairly risk-free. The amount invested is secure with the financial institution, while you enjoy stable returns at the predetermined tax-saving FD rates.

What are the minimum and maximum amounts one can deposit in a tax-saving FD?

The minimum deposit amount in a tax-saving FD varies according to the terms and conditions of the financial institution. However, you can deposit a maximum of ₹1.5 Lakhs in a financial year.