6 tax-saving bank fixed deposit schemes with high interest rate offerings

Planning

oi-Roshni

By Roshni Agarwal

Published: Tuesday, March 25, 2014, 9:57 [IST]

For taxpayers intending to complete their tax planning for the current financial year, tax saving deposit schemes of bank is an avenue to get the benefit of tax break and hence reduce income tax liability. The benefit though comes at a cost of a 5-year lock-in and no provision for premature withdrawals i.e. the invested amount as well as the return cannot be withdrawn before the 5 year term.

The benefit by investment in the tax saving deposit scheme can be availed for a maximum investment of Rs. 1 lakh. To know more about such tax saving bank deposit schemes, click here.

So, if you are among those set of investors who have ample liquidity and wish to invest in instruments that saves tax for you. Here is a look at some such tax saving deposit scheme of different public and private sector banking institutions that currently are offering highest returns.

1. Lakshmi Vilas Bank: To both regular and senior citizens, the bank offers an interest rate of 9.50% per annum.

2. City Union Bank: For both general and senior citizen, the bank offer a rate of interest p.a. Of 9.25%. The CUB Tax Saver Silver Deposit of the bank can be opened either singly or jointly. However, in case of joint holding in the deposit scheme as is the provision in the case of tax-saving deposit scheme, the tax break shall be available only to the first or primary holder in the deposit scheme.

3. Bank of Baroda: Baroda Tax savings term deposit on its tax saving deposits is offering an interest rate @ 9.10% p.a. The interest rate remains the same for still higher tenure over 5 years.

4. IDBI Bank: For investments upto Rs. 1,00,000 in tax-saving Suvidha deposit scheme, investor can get bot the advantage of tax exemption under section 80C of the Income Tax Act as well as high returns to the tune of 9.0% and 9.5% on regular and senior citizen deposits.

5. State Bank of India: On its SBI Tax Savings Scheme 2006 or SBITSS, the interest rates are aligned according to interest rates on normal term deposits. So, a 5-year tax-saving deposit scheme fetches a return at par with the 5- year term deposit scheme of the bank. Currently, the bank offers an interest rate of 9.0% and 9.5% to the general public and senior citizens respectively. So, subscribing to the particular scheme, investors can also enjoy tax break benefits.

6. ICICI Bank Tax-Saver Fixed Deposit: On its tax saving deposit scheme, the private sector lender is providing a return of 8.75% and 9.50% to regular and senior citizens respectively.

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