Tax Saving FD – Tax on FD Interest of SBI, ICICI, Kotak, Axis

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Best Tax Saving FD Rates 2021

Banks Regular Interest Rates Senior Citizens Rates
SBI Tax Savings Scheme 5.40% 6.20%
HDFC Bank 5 Year Tax Saving Fixed Deposit 5.50% 6.25%
Axis Bank Tax Saver Fixed Deposit 5.50% 6.05%
Kotak Bank Tax Saving Fixed Deposit 5.30% 5.80%
ICICI Bank Tax Saving Fixed Deposit 5.50% 6.30%
Bank of Baroda Tax Savings Term Deposit 5.25% 5.75%
Corporation Bank Tax Saver Plus Deposit Scheme 5.60% 6.10%
IDBI Bank Suvidha Tax Saving Fixed Deposit 5.10% 5.60%
Citibank Tax Saver Deposits 3.50% 4.00%
RBL Bank Tax Savings Fixed Deposits 6.60% 7.10%
Central Bank of India Tax Saving Deposit 5.10% 5.60%
PNB Tax Saver Fixed Deposit Scheme 5.30% 5.80%
Bajaj Finance Tax Saving Fixed Deposit 7.00% 7.25%
Ujjivan Small Finance Bank Tax Saver Fixed Deposits 6.50% 7.00%
AU Small Finance Bank 5 Years Tax Saving Fixed Deposit 6.50% 7.25%
Jana Small Finance Bank Tax Savers FD 7.25% 7.75%
Tax Saver Fixed Deposit Scheme 6.75% 7.50%

Tax Saving FD Interest

A tax abatement governs interest gained in the fixed deposit. Tax on FD interest is subtracted as per the tax slab rate classification individual investors fall into. To get the tax slab rate, add the advanced interest income to your total earnings. Banks and non-banking financial firms deduct Tax Deducted at Source (TDS) if the obtained interest is more than ₹ 10,000 in the case of regular investors and ₹ 50,000 for senior citizens. TDS is usually subtracted at a rate of 10%; nevertheless, it goes up to 20% if the investor defaults in providing a PAN card. According to the IT slabs for the fiscal year 2020-21, tax rates are given below.

Income Tax Slab New Tax Rates FY 2020-21
Up to ₹ 2.50 Lakh None
₹ 2.50 Lakh – ₹ 5 Lakh 5% (Tax rebate of ₹ 12 available under section 87A)
₹ 5 Lakh – ₹ 7.50 Lakh 10%
₹ 7.50 Lakh – ₹ 10 Lakh 15%
₹ 10 Lakh – ₹ 12.50 Lakh 20%
₹ 12.50 Lakh – ₹ 15 Lakh 25%
₹ 15 Lakh and above 30%

Benefits of Tax Saving Fixed Deposit

Among the tax-saving FDs, investors can enjoy the given benefits.

  • Avail tax exclusions under section 80C of IT Act, 1961.
  • A maximum sum of ₹ 1.50 Lakh per fiscal year is subject to a tax write-off.
  • Set an amenable tenure of 5-10 years as per suitability.
  • Access to early withdrawal after 5-year lock-in duration.
  • Senior citizens can receive a hike of up to 0.50% in interest rates.
  • Avail of the facility of a joint account.
  • Insurance of ₹ 5 Lakh upon bank FD in case of any default by the provider.

Eligibility Criteria for Tax Saving Fixed Deposit

To be qualified for starting a tax saving FD account at any bank, non-banking business corporation, or post office, one must be

  • An Indian resident
  • Individuals
  • Hindu Undivided Families (HUF).

Top Banks on Tax Saving Fixed Deposits

Most banks and non-banking financial firms offer tax-saving FDs. Before deciding on any tax saving plans, investors must discover the different interest rates and other terms and conditions of the banks providing the tax-saving fixed deposit. Following is a brief analysis of various banks offering tax-saving FD.

SBI Tax Saving FD

SBI tax saving FD has interest rates of 5.40% for general accounts and 6.20% for senior citizen accounts. It provides a tenure of 5 years and tax privileges as per Section 80C of the IT Act, 1961. The maximum sum for deposit is ₹ 1.50 Lakh, and the minimum deposit for tax saving FD offered by SBI is ₹ 1,000. Investors can make various deposits via net banking.

ICICI Bank Tax Saving FD

Under the tax saving FD offered by ICICI, investors can either invest in the established plan or the reinvestment plan. The traditional plan provides a monthly or quarterly payout. Whereas the reinvestment plan pays quarterly increased interest that is reinvested with the principal amount. The ICICI tax saving FD has a tenure of 5 years and a minimum amount for the deposit of ₹ 10,000. The maximum deposit limit is ₹ 1.50 Lakh. The interest rates for general accounts are 5.50% and 6.30% for senior citizens.

Axis Bank Tax Saving FD

Axis Bank tax saving FD comes with a duration of 5 years and a maximum amount of ₹ 1.50 Lakh for deposits. It provides an interest rate of 5.50% for general accounts and 6.05% for senior citizen accounts.

Kotak Bank Tax Saver FD

Kotak Bank tax saving FD offers an interest rate of 5.30% for general accounts and 5.80% for senior citizens. The lock-in duration is of 5 years, and the highest deposit amount is ₹ 1.50 Lakh. The least amount for deposit is ₹ 100.

Documents required for Tax Saving FD Account

The necessary documents to start a tax saving FD account are as follow:

  • Permanent Account Number(PAN) Card
  • Passport
  • Aadhar Card
  • Voter ID Card
  • Ration Card
  • Proof of Residence(Government-recognised)
  • Age proof (for senior citizens)
  • Passport-size photographs.

To know more about the Tax saving fixed deposits, visit the Dialabank website now.

 FAQs about Tax Saving FD

✅ Is tax saver FD a good investment?

Yes, tax saver, FD is a good investment option as it reduces the tax deduction rate on your income. The guaranteed returns make it a safe option as well. The tenure and payout can be set as per your convenience. Analyze the interest rate provided by various banks and non-banking financial companies before you start investing.

✅ What is the minimum amount needed to open a Tax Saver FD account?

The minimum amount needed to open a tax saver FD account varies from one provider to another. For example, the minimum amount for ICICI tax saver FD is ₹ 10,000. SBI allows opening a tax saver FD account with a minimum deposit of ₹ 1,000. The lowest deposit amount, which is ₹ 100, is offered by HDFC tax saver FD.

✅ Can we break tax-saving FD?

Tax saving FDs that generally come with a 5 year lock-in period do not allow any premature withdrawal. However, once the 5 year lock-in period has been completed, investors get access to premature withdrawal. The terms and conditions for premature withdrawal vary from bank to bank.

✅ Which bank is best for Tax Saver Fixed Deposit?

Investors can find the best-suited tax saver fixed deposit by analyzing the FDs’ return rates, tenure, and other factors. Based on the interest rates, the best banks for tax saver fixed deposits are HDFC, ICICI, IDFC, SBI, and Yes Bank.

✅ Is interest on 5 year FD taxable? Tax Saving FD

FDs’ interest is market to tax deduction under the 80C of Income Tax Act (196). However, the interest amount accumulated in the fifth year of FD is not taxable, as it is paid along with the maturity amount.

✅ Which is better, tax saver FD or PPF?

PPF generates a higher return rate than FD and the lock-in period of PPF is also longer than FD. As far as taxation is concerned, PPF is completely tax-free in investors’ hands, whereas tax-saving FDs are entirely taxable. So, tax saving FD has more liquidity, but the PPF provides more tax benefits than tax saver FD.