Tax Saving Fixed Deposit under Section 80C of Income tax is a popular and safe instrument for Tax saving. You can invest maximum of Rs. 1 Lacs in the same.
Below is the list of banks and their respective interest rates offer for general and senior citizens for their Tax Saving FDs.
The best Tax Saving Fixed Deposit Interest offered is 9.5% for General by Tamilnad Mercantile Bank, State Bank of Bikaner and Jaipur, United Bank of India and Dhanalakshmi Bank; while its 10% for Senior Citizens by Tamilnad Mercantile Bank and City Union Bank.
The list is sorted in alphabetical order and highlighted best interest offes.
| Banks | General | Senior Citizen |
| Allahabad Bank | 8.25 | 9.25 |
| Andhra Bank | 9.00 | 9.50 |
| Axis Bank | 8.50 | 9.00 |
| Bank of Baroda | 9.00 | 9.00 |
| Bank of India | 9.00 | 9.50 |
| Bank of Maharashtra | 9.00 | 9.50 |
| Canara Bank | 9.25 | 9.75 |
| Catholic Syrian Bank | 8.50 | 9.50 |
| Central Bank of India | 8.50 | 9.00 |
| Citi Bank | 8.00 | 8.00 |
| City Union Bank (CUB) | 9.25 | 10.00 |
| Corporation Bank | 9.00 | 9.50 |
| Dena Bank | 9.00 | 9.50 |
| Deutsche Bank | 8.00 | 8.00 |
| Development Credit Bank | 9.00 | 9.50 |
| Dhanalakshmi Bank | 9.50 | 9.50 |
| Federal Bank | 9.00 | 9.50 |
| HDFC Bank | 9.25 | 9.75 |
| ICICI Bank | 8.50 | 9.00 |
| IDBI Bank | 9.25 | 9.75 |
| Indian Bank | 9.00 | 9.50 |
| Indian Overseas Bank | 9.00 | 9.50 |
| ING Vysya Bank | 9.00 | 9.50 |
| J&K Bank | 9.00 | 9.50 |
| Karur Vysya Bank | 9.00 | 9.50 |
| Kotak Bank | 9.00 | 9.50 |
| Lakshmi Vilas Bank | 9.30 | 9.80 |
| Nainital Bank | 8.50 | 9.00 |
| Oriental Bank of Commerce | 9.05 | 9.55 |
| Punjab and Sind Bank | 8.75 | 9.75 |
| Punjab National Bank | 9.00 | 9.50 |
| South Indian Bank | 8.75 | 9.50 |
| State Bank of Bikaner and Jaipur | 9.50 | 9.75 |
| State Bank of Hyderabad | 9.00 | 9.70 |
| State Bank of India (SBI) | 9.00 | 9.75 |
| State Bank of Mysore | 9.00 | 9.75 |
| State Bank of Patiala | 9.25 | 9.75 |
| State Bank of Travancore | 9.25 | 9.75 |
| Tamilnad Mercantile Bank | 9.50 | 10.00 |
| Thane Janata Sahakari Bank | 9.00 | 9.25 |
| The Ratnakar Bank | 9.00 | 9.50 |
| UCO Bank | 8.50 | 9.25 |
| Union Bank of India | 9.00 | 9.50 |
| United Bank of India | 9.50 | 9.75 |
| Vijaya Bank | 9.00 | 9.50 |
| Yes Bank | 8.75 | 9.25 |
Source: Bank Websites ; Updated: August 06, 2012
Key Points – Tax Saving FDs:
- Deposits are accepted for a period of 5 years only
- Interest rate as applicable from time to time for 5 years to term deposits. Senior citizens are entitled for additional interest as applicable.
- Depositor can opt for either cumulative or non-cumulative way of crediting periodical interest.
- Depositor gets benefit U/s.80C of the Income Tax Act. 1961
- Minimum deposit is Rs.100 and in multiples thereof
- Maximum deposit in a Financial Year Rs.1,00,000/- [i.e., 1 st April to 31 st March of the following calendar year]
- Deposits cannot be withdrawn prematurely
- 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!
Tax Saving Fixed Deposit (FD) u/s 80C – Interest Rates,
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I know that section 80C is just for Rs.1 lakh, but what if I make a tax saving FD for 5 lakh? Is it sensible?
Secondly, if I have LIC for Rs.20000, can I still create a tax saving FD for Rs.1 lakh? Is it sensible to do so?
Also, is it better to invest in a tax saving FD or to go for plans like the ICICI has (like the Pinnacle plan and wealth builder plan where the amount I invest is eligible for 80C and the returns are tax free, and part of the money gets invested in equity?)
The total investment for which you can claim tax benefit is Rs 1 Lakh only. So there would be no additional tax benefit for investing in LIC over and above Rs 1 lakh in Tax saving Fixed Deposit Scheme.
As for investing 5 lakh in Tax saving FD in a single financial year, I don’t think its a good idea. You don’t get special interest rate, so why would you unnecessarily complicate by investing 5 lakhs in tax saving FD.
You should stay away from ULIPs or insurance products purely for tax saving benefits. I would recommend you to download a short presentation on tax Saving for FY 2013-14 from here.