Tax savings deposits from banks provide tax relief up to Rs 1 lakh under the Income Tax Act. What this means is that by investing in these deposits you could reduce the amount from your taxable income thereby saving on Income Tax. Here is quick comparison of interest rates on 6 tax saving deposits from banks in India.
Baroda Tax Savings Term Deposit
The Baroda Tax Savings Term Deposit offers an interest rate of 9.05 per cent for the 5 year deposit. It's important to remember that Bank Tax Savings Deposit have a compulsory lock-in period of 5 years and under no circumstances can you encash the same earlier.
PNB Tax Saver
PNB Tax Saver Fixed Deposit Scheme offers an interest rate of 9 per cent, which is slightly below the rates offered by Bank of Baroda. Loan is available against the Deposit after lock in period of 5 years against the Deposit.
ICICI Bank Tax Saver FD
ICICI Bank Tax Saver FD offers an interest rate of 8.75 per cent to individuals and 9.50 per cent for senior citizens. Tax is deducted at source, from the interest on Tax-Saver Fixed Deposit, like all other Tax Saving FDs.
KBL - Tax Planner
KBL Tax Planner offers an interest rate of 9 per cent per annum for its 5 year deposit. Senior Citizens are offered an interest rate of 9.5 per cent. As mentioned earlier lock-in period of 5 years would apply for all tax savings Fixed Deposits.
SBI Tax Savings Bank Deposit
The tax savings scheme from SBI attracts an interest rate of 9 per cent. It's important to note that the maximum tax benefit available under these deposits are Rs 1 lakh and amounts in excess of the same would not attract tax benefits.
Canara Tax Saver Scheme
The deposit offers an interest rate of 8.75 per cent and is not the best amongst peers. It's important to remember that tax savings FDs cannot be pledged as security/collateral security for loans/advances.