The act of saving and investing money regularly will significantly change the way you live your life in the future. But investing isn’t about beating others at their game, it’s about controlling yourself at your own game. Fixed Deposits are one of the ways to invest and also save taxes, which will be discussed in this guide.
A five-year tax savings fixed deposit account can be opened by all resident individuals (holding a PAN card). In this scheme, senior citizens above the age of 60 years are also eligible.
Furthermore, tax savings fixed deposits can be opened both singly and jointly. If it is a case of a joint account, in accordance with the section 80C of the Income Tax Act, 1961, tax benefit will be availed by the first holder of the deposit.
One can invest in a five years tax savings fixed deposits in any private or public-sector bank, except co-operative and rural banks. In accordance with the Term deposit scheme, 2006, issued by the Central Government of India, a five-year tax savings Fixed Deposit scheme will not have the facilities of premature withdrawal, loan against Fixed Deposit, and Auto-renewal.
The interest rates on fixed deposits vary from time to time. However, it is possible to check the latest interest rates with the respective bank where you intend to open the fixed deposit with. As of May 1st, 2018, banks are offering interests at the rate of 6.00% – 7.50% for general public and 7.00% – 8.00% for Senior Citizens.
The Ratnakar Bank offers most handsome rate of interest of 7.50% on a five-year tax Saving general Public and 8.00% for Senior Citizens These fixed deposits are like any other fixed deposits. The only difference is they comes in with a lock-in period of five years.
The minimum amount that can be invested is INR 1000, and in multiples thereof. There is no upper limit for investment in this scheme. (The minimum investment amount can vary from bank to bank)
The following documents are required as KYC details, to invest in a five-year tax savings fixed deposit scheme:
Note: An account opener can submit any other identity proof or address proof, subject to the respective Bank’s approval.
Any individual can invest in a five-year tax savings fixed deposit (FD) through any public or private sector bank except for co-operative and rural banks. The investor receives FD receipt from the bank at the time of opening the Tax-Saver Fixed Deposit Account. It can be applied online as well as offline. All banks provide facility to download their form and submit along with the required amount of cash / cheque / direct debit.
Produce the original document(s) for verification & a photocopy of each document.
Many banks in India offer tax savings deposits for five years. The below mentioned are recognized as TOP five Indian Banks offering tax saver fixed deposits:
Rates of interests as on 1 May 2018 under a five-year tax savings fixed deposit scheme
|Bank||General Interest Rate||Senior Citizen Interest Rate||Scheme Name|
|Allahabad Bank||6.50%||6.50%||Allahabad Bank Tax Benefit Term Deposit Scheme|
|Andhra Bank||6.25%||6.75%||AB Tax Saver Deposits|
|Axis Bank||6.90%||7.40%||Axis Bank Tax Saver Deposits|
|Bandhan Bank||6.40%||6.90%||Bandhan Bank Tax Saver FD|
|Bank of Baroda||6.70%||7.20%||Baroda Tax Savings Term Deposit|
|Bank of India||6.25%||6.75%||Star Sunidhi Tax-Saving Deposit Scheme|
|Bank of Maharashtra||6.00%||6.50%||Bank of Maharashtra Tax Saver FD|
|Canara Bank||6.00%||6.50%||Canara Tax Saver Scheme|
|Catholic Syrian Bank||6.50%||7.00%||CSB Tax Savings Support|
|Central Bank of India||6.50%||7.00%||CENT Tax Saving Deposit|
|City Union Bank||7.10%||7.10%||CUB Tax Saver Gold Deposit|
|Citibank||5.25%||5.75%||Citibank Tax Saver FD|
|Corporation Bank||6.50%||7.00%||Corp Tax Saver|
|DCB Bank||7.20%||7.70%||DCB Bank Tax Saver FD|
|Dena Bank||6.30%||6.80%||Dena Maha Tax Bachat Yojna|
|Dhanalakshmi Bank||6.50%||6.50%||Dhanam Tax Advantage Deposit|
|Federal Bank||6.50%||7.00%||Federal Tax Savings Deposit|
|HDFC Bank||7.00%||7.50%||HDFC Bank Tax Saver FD|
|ICICI Bank||6.50%||7.00%||ICICI Bank Tax Saver FD|
|IDBI Bank||6.75%||7.25%||Suvidha Tax Saving Fixed Deposits|
|IDFC Bank||7.20%||7.70%||IDFC Tax Saving Fixed Deposits|
|Indian Bank||6.00%||6.50%||IB Tax Saver schemes|
|Indian Overseas Bank||6.80%||7.30%||IOB Tax Saver Deposit Scheme|
|Indus Ind Bank||6.50%||7.00%||Indus Tax Saver Scheme|
|J&K Bank||6.80%||7.30%||Tax Saver Term Deposit Scheme|
|Karnataka Bank||6.50%||7.00%||KBL – Tax Planner|
|Karur Vysya Bank||7.00%||7.00%||KVB – Tax Shield Deposits|
|Kotak Mahindra Bank||6.25%||6.75%||Tax Saving Deposits|
|Lakshmi Vilas Bank||7.30%||7.90%||Lakshmi Tax Saver Deposits|
|Oriental Bank of Commerce||6.40%||6.90%||Oriental Bank Tax Saving Term Deposit|
|Post Office NSC (5 Years)||7.60%||7.60%||National Saving Certificate|
|Punjab and Sind Bank||6.55%||7.00%||PSB Fixed Deposit Tax-Saver Scheme|
|Punjab National Bank||6.25%||6.75%||PNB Tax Saver Fixed Deposit Scheme|
|Ratnakar Bank||7.15%||7.65%||Ratna Tax Saving Scheme|
|South Indian Bank||6.50%||7.00%||SIB Tax Gain 2006|
|State Bank of India||6.75%||7.25%||SBI Tax Savings Scheme 2006 (SBITSS)|
|Syndicate Bank||6.50%||7.00%||SyndTaxShield Deposit Scheme|
|Tamilnad Mercantile Bank Ltd||6.90%||7.40%||TMB TSD (Mullai)|
|UCO Bank||6.25%||6.75%||UCO Tax Saver Deposit Scheme – 2006|
|Union Bank of India||6.50%||7.00%||Union Tax Saver|
|United Bank of India||6.00%||6.50%||United Bank of India Tax Saver FD|
|Vijaya Bank||6.50%||7.00%||Vijaya Tax Savings Scheme|
|Yes Bank||7.00%||7.50%||Yes Bank Tax Saver FD|
Investment under a five-year tax savings fixed deposit is eligible for tax deduction u/s 80C.
In accordance with Government notification, premature withdrawal of FD is not allowed prior to the completion of original tenure i.e. five years. In case, anyone redeems the amount of the fixed deposit prior to completion of tenure (five years), interest is paid at the rate applicable on the date of deposit, for the period for which the deposit has remained with the Bank. In case of premature withdrawal, the deposit may be bound by penal rate of interest as set by the Bank on the date of deposit. Under certain conditions, withdrawal is allowed for the Tax-Saver FD; but, there is no facility to avail a loan against tax saver fixed deposits.
To explore all your tax savings options, including five year FD’s, enlist the aid of the experts at H&R Block India to maximize your tax savings and for better tax planning.