Highest Tax Saving Bank Fixed Deposit Rates U/S 80C – August 2016

Highest Tax Saving Bank Fixed Deposit Rates - 80C - August 2016

Highest Tax Saving Bank Fixed Deposit Rates – 80C – August 2016

Tax Saving Fixed Deposits one of the most popular way to save taxes u/s 80C of income tax. These are like normal Fixed Deposit with banks but is labeled as “Tax Saving FD” while making the deposit.

Why you Should Invest?

  1. Convenient to invest. ICICI Bank, SBI, HDFC Bank, etc offers online facility for Tax Saving FD
  2. Redemption on maturity comes directly to your bank account
  3. High Safety – FD up to Rs 1 Lakh is insured

Why you Should Not Invest?

  1. There are lot of competing products like EPF, PPF, ELSS to exaust the investment of Rs 1.5 Lakh u/s 80C
  2. The interest earned is taxable
  3. Cannot be withdrawn prematurely
  4. Cannot be pledged to secure loan or as security

Also Read: Best Tax Saving Investments u/s 80C

Whats on Offer?

As of August 1, 2016 banks are offering 6.75% – 8.15% for general public and 7.25% – 8.65% for Senior Citizens.

  1. The best Tax Saving Fixed Deposit Interest offered is 8.15% for General Public byThe Ratnakar Bank
  2. The best Senior citizens Tax Saving Fixed Deposit Interest offered is 8.65% by The Ratnakar Bank

The table below lists the banks in alphabetical order with their respective interest rate offer on Tax Saving FDs for General and Senior Citizens.

Click for Best Interest Rate on FDs for General public

Click for Best Interest Rate on FDs for Senior Citizens

The highest Interest Rates have been highlighted:

Bank     General     Senior Citizen Scheme Name
Allahabad Bank 7.25% 7.25% Allahabad Bank Tax Benefit Term Deposit Scheme
Andhra Bank 7.50% 8.00% AB Tax Saver Deposits
Axis Bank 7.25% 7.75% Axis Bank Tax Saver Deposits
Bandhan Bank 7.75% 8.25% Bandhan Bank Tax Saver FD
Bank of Baroda 7.30% 7.80% Baroda Tax Savings Term Deposit
Bank of India 7.25% 7.75% Star Sunidhi Tax-Saving Deposit Scheme
Bank of Maharashtra 7.25% 7.75% Bank of Maharashtra Tax Saver FD
Canara Bank 7.00% 7.50% Canara Tax Saver Scheme
Catholic Syrian Bank 7.30% 7.80% CSB Tax Savings Support
Central Bank of India 7.25% 7.75% CENT Tax Saving Deposit
City Union Bank 7.60% 7.60% CUB Tax Saver Gold Deposit
Corporation Bank 7.25% 7.75% Corp Tax Saver
DCB Bank 7.90% 8.40% DCB Bank Tax Saver FD
Dena Bank 7.00% 7.50% Dena Maha Tax Bachat Yojna
Dhanalakshmi Bank 7.10% 7.10% Dhanam Tax Advantage Deposit
Federal Bank 7.25% 7.75% Federal Tax Savings Deposit
HDFC Bank 7.50% 8.00% HDFC Bank Tax Saver FD
ICICI Bank 7.50% 8.00% ICICI Bank Tax Saver FD
IDBI Bank 7.40% 7.90% Suvidha Tax Saving Fixed Deposits
IDFC Bank 7.50% 8.00% IDFC Tax Saving Fixed Deposits
Indian Bank 7.00% 7.50% IB Tax Saver schemes
Indian Overseas Bank 7.00% 7.50% IOB Tax Saver Deposit Scheme
Indus Ind Bank 7.25% 7.75% Indus Tax Saver Scheme
J&K Bank 7.35% 7.85% Tax Saver Term Deposit Scheme
Karnataka Bank 7.50% 8.00% KBL – Tax Planner
Karur Vysya Bank 7.50% 7.75% KVB – Tax Shield Deposits
Kotak Mahindra Bank 7.00% 7.50% Tax Saving Deposits
Lakshmi Vilas Bank 7.80% 7.80% Lakshmi Tax Saver Deposits
Oriental Bank of Commerce 7.25% 7.75% Oriental Bank Tax Saving Term Deposit
Post Office NSC (5 years) 8.10% 8.10% 5 Year National Savings Certificate
Punjab and Sind Bank 7.25% 7.75% PSB Fixed Deposit Tax-Saver Scheme
Punjab National Bank 7.20% 7.70% PNB Tax Saver Fixed Deposit Scheme
Repco Bank 8.00% 8.50% Repco Bank
South Indian Bank 7.30% 7.80% SIB Tax Gain 2006
State Bank of Bikaner and Jaipur 7.00% 7.50% SBBJ Tax Saver Term Deposit Scheme
State Bank of Hyderabad 7.00% 7.30% SBH Tax Saver Scheme
State Bank of India 7.00% 7.25% SBI Tax Savings Scheme 2006 (SBITSS)
State Bank of Mysore 7.75% 8.15% SBM Tax Saver Scheme
State Bank of Patiala 7.37% 7.77% SBP – Tax Saving Term Deposit
State Bank of Travancore 7.00% 7.00% State Bank of Travancore Tax Saver FD
Syndicate Bank 7.30% 7.80% SyndTaxShield Deposit Scheme
Tamilnad Mercantile Bank Ltd 7.70% 8.20% TMB TSD (Mullai)
The Ratnakar Bank 8.15% 8.65% Ratna Tax Saving Scheme
UCO Bank 7.25% 7.75% UCO Tax Saver Deposit Scheme – 2006
Union Bank of India 7.25% 7.75% Union Tax Saver
United Bank of India 6.75% 7.25% United Bank of India Tax Saver FD
Vijaya Bank 7.25% 7.75% Vijaya Tax Savings Scheme
Yes Bank 7.50% 8.00% Yes Bank Tax Saver FD

 Source: Bank Websites                                                     Last Updated: August 2, 2016

Taxation & TDS – Tax Saving Fixed Deposits:

The interest received on tax Saving Fixed Deposit is fully taxable. The interest income is considered as “income from other sources” for Tax filing and taxed at marginal tax rates applicable.

TDS would be deducted at the rate of 10% of the interest paid, if the interest paid exceeds Rs 10,000 in a financial year. You can see the same in Form 26AS.

In case your income does not exceed taxable slab and so want to avoid TDS, you can submit Form 15G or 15H  when making the deposit. You would also need to submit the form at the start of every financial year to the concerned bank branch.

Also Read: How to Fill Form 15G and 15H?

Key Points – Tax Saving FD:

Below are some of points to keep in mind while investing in Tax Saving Deposits:

  1. As the Tax Saving FD scheme was introduced in Budget of 2006, it’s also known as Tax Saving Deposit scheme 2006 (Notification Number 203/2006 and SO1220 (E) dated 28/07/2006)
  2. Most of the banks accept deposit of 5 Years only. However there are banks with deposit tenures of more than 5 Years
  3. You can deposit on either Single or Joint name. However benefit of tax deduction is available for first holder only.
  4. Most banks offer interest rate which is similar to their 5 years term deposits. Only a few banks give slightly higher interest rate for their Tax Saving Fixed Deposits
  5. Most banks give Senior citizens and their staff members additional interest of 0.25% to 0.5%
  6. Depositor can opt for either cumulative or non-cumulative way of crediting periodical interest
  7. Don’t be mislead by banks advertisements about their yield on Tax Saving FDs. Those are manipulative calculations
  8. Be cautious of small co-operative banks as they have higher risk than bigger private and public sector banks
  9. Depositor gets benefit U/s.80C of the Income Tax Act. 1961
  10. Minimum deposit is Rs.100 and in multiples thereof
  11. Maximum deposit in a Financial Year Rs.1,50,000/- [i.e., 1 st April to 31 st March of the following calendar year]
  12. Deposits cannot be withdrawn prematurely
  13. Deposits cannot be pledged to secure loan or as security

Disclaimer: We have tried to keep interest rates up to date, but as these change frequently you are advised to check with the bank before investing. Also it would be great if you can point out any errors through comments or email!

Direct link for Interest Rates on FDs of Banks:

Below is the direct link for Interest Rates of Major Banks. You might want to check the interest rates before doing your FD.

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44 thoughts on “Highest Tax Saving Bank Fixed Deposit Rates U/S 80C – August 2016

  1. Hi Amit
    Thanks for such a great post. Which product PPF or fixed deposit, should i choose for tax benefit? Please suggest.

  2. Hi, which is the best avenue to park around 1.5 lac rupess for 16 months and get best return?

    • You can choose between Fixed Deposit (assured return but taxed at slab rate), debt mutual fund (comparable to FD returns and taxed at slab rate) or arbitrage mutual fund (slightly lower to FD rates but tax free returns).

      In case you are in lower tax bracket go for Fixed Deposit and if higher tax bracket go for Arbitrage Funds.

  3. I want to invest 1.5lac so please guide me for better option. Both in terms of tax saving and return as well.

  4. Hi

    I want to know whether tax saving FD can be breaked after 5 months or 1 year. If yes what will be the amount returned. For example If i invest 1lakh what will be the amount refunded.

    • The tax saving fixed deposit cannot be withdrawn prematurely. Only in cases where the deposit was made for more than 5 years, you can withdraw after completion of 5 years.

  5. GM AMIT.. I would like to invest Rs.50000/- for Tax saving. Which one is best option. SBI Magnum mutual fund or FD in ICICI bank ?

    • ELSS (Tax saving mutual fund) and tax saving FD are at two extremes. The decision of what to invest depends on your risk taking ability, your present portfolio, usage of funds on maturity, investment duration among other things. ELSS are more volatile, may give you negative returns but is tax free on maturity. FD on the other hand have assured returns and is taxable. So choose wisely. I had compared all the tax saving options available u/s 80C in other post – it might help.

  6. UDAY BANERJEE says:

    SIR, I WANT TO DEPOSIT AN AMOUNT AS FD (MIS SCHEME) TUNE OF AMOUNT 5 LAKH AND ABOVE IN RBL BANK LTD OR DHFL (CARE AAA, BWR AAA RATING ) FOR LONG TERM . SIR PLZ YOU RECOMEND WHICH WILL BE BETTER? MY MOBILE NO 9830334787

    • Both RBL and DHFL are good options. You should compare the features important to you. Opening & managing account with RBL would be easier than DHFL. Also check penalty for premature withdrawal in both cases. DHFL might have higher penalty. You can opt for either of the two or divide the money among the two depending on your comfort level.

  7. Good. Keep it up. Right now this is the only site that updates comparative FD rates regularly.

  8. Very nice guide path.

  9. Nice info

  10. Satyannarayana Yedla says:

    Good information.

  11. Check out repco bank for south indians.. they offer 9% for senior citizens…
    http://repcobank.com/rate_of_interest.php

  12. Now a days best FDR Rate gives New India Cop Op Bank its 10% for 27 Months for RD also same

    • Cooperative banks in general offer higher interest rates but are more risky. You should limit all your deposits to not more than Rs 1 lakh in each co-operative bank. As in case of any default you can get your money back from insurance.

  13. nice

  14. S A Deshpande says:

    I will be retiring from a pvt company . I will not get any pension. I would like to have monthly income. Can you pl suggest how I should invest so that I will get regular monthly income. Also how can I save tax. You can take example of Rs 1000000/- How it should be invested in various schemes to have a regular monthly income.

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