Amid the cut in interest rates tax-saving investments such as fixed deposits still appear to top the list. Because of the low-risk nature and bank-based investment vehicle most of the investors consider fixed deposits when it comes to get assured returns along with tax benefits. Under section 80C of the Income Tax Act, 1961, tax-saving fixed deposits are an efficient strategy to get a tax deduction. Through investing in tax-saving fixed deposits, depositors can claim a benefit of up to a limit of Rs 1.5 lakh. Remember that, in tax-saving bank FDs, no partial or premature withdrawal is permitted. These investments come with a lock-in duration of 5 years to 10 years respectively. Various banks, such as SBI Bank, ICICI Bank, HDFC Bank, and Axis Bank, provide tax-saving fixed deposit schemes to the eligible investors. The rate of interest of these banks vary and ranges from 5% to 6.3%. Below are the few banks promising higher interest rates on tax saving fixed deposit schemes for deposit amount of below Rs 2 crore.
SBI Tax Saving FD
On its tax-saving fixed deposits, SBI provides a lock-in term of 5 years. Annually, investors can deposit up to Rs 1,50,000 lakh and can seek tax deductions under Section 80C. SBI is currently giving the general public an interest rate of 5.40% and senior citizens with 6.20% per annum. By opening a fixed deposit account through net banking customers of SBI can deposit a minimum amount of Rs 1,000 up to a limit of Rs 1.5 lakh.
ICICI Bank Tax Saving FD
Two types of tax-saving fixed deposit schemes are proposed by ICICI Bank-traditional plan and reinvestment plan. For the traditional plan, the payout of interest is monthly or quarterly. The interest is quarterly compounded and reinvested with the principal amount under the reinvestment scheme. A minimum deposit of Rs 10,000 with an upper limit of Rs 1,50,000 lakh can be made by investors. This scheme by ICICI Bank has a period of 5 years and gives 5.50 percent interest per annum on a tax saver fixed deposit to the general public and 6.30 percent per annum to senior citizens.
HDFC Bank Tax Saving FD
The tax saver fixed deposits of the HDFC Bank fall with a 5 year lock-in term. The bank currently proposes an interest rate of 5.50 percent per annum to the general public and 6.25 percent to senior citizens with monthly or quarterly interest payout options. With a minimum deposit of Rs 100 up to Rs 1,50,000 lakh, investors can invest in this tax saving fd scheme.
Axis Bank Tax Saving FD
Axis Bank provides three varieties of fixed deposits for tax savers: quarterly interest payout, monthly interest payout, and reinvestment plan. The preference for a fixed deposit falls with a 5-year lock-in term and one can invest in this scheme with a minimum deposit of Rs 100 up to a limit of Rs 1.5 lakh. Axis Bank is now giving the general public an interest rate of 5.50 percent and senior citizens with 6.00 percent.