Tax-saving FDs: These private, PSU banks offer best interest rate on schemes


A fixed deposit or FD scheme helps you in a number of ways – you can invest to create a decent corpus to meet short to medium term financial goals and also get tax benefits.

If you are a conservative depositor, you may consider investing in fixed-term deposits, as the schemes are considered one of the safest savings options among other market-based tax savings options.

As a rule, FD programs are equipped with several runtime options. For example, you can invest in FDs for 1 to 10 years depending on the scheme you choose. FDs also come with a term of less than a year. Thus, you can choose the term of office of the FD according to your wishes. You also need to know that not all fixed-term deposits are tax-advantaged. Banks that offer five-year FDs can help you save on taxes.

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Investing in such time deposits allows you to claim an income tax deduction under Section 80C of the Income Tax Act. The maximum investment you can make in a tax-saving term deposit is 1.5 lakh per fiscal year. While investing in such FDs, you should review the features, benefits, and terms of the program. Typically, tax-saving FDs don’t give you credit or prepayment penalties.

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You need to know that the tax benefit is only available to the first FD account holder. So if you have a co-owner, they cannot claim any tax benefits.

Check out some of the best 5 year banks with tax savings and fixed interest rates.

Data as on the website of the respective bank on September 21, 2022;  Compiled by BankBazaar.com

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Data as on the website of the respective bank on September 21, 2022; Compiled by BankBazaar.com

You can purchase such tax-saving FDs by visiting the bank’s website or a nearby bank branch. After investing in such tax saving FD, you will claim a tax deduction benefit in that particular fiscal year.

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Disclaimer: The interest rate of all listed (BSE) Public & Pvt banks considered for data compilation (excluding foreign banks and small financial banks); Banks for which data is not available on their website are not included. The table includes only tax saver FDs (for non-seniors) for a 5-year term. Top 5 Public and Pvt. The banks are listed in their respective category in descending order, ie the bank with the highest interest rates is at the top and those with the lowest interest rates are at the bottom.

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