Fixed deposit (FD) is one of the safest and secure investment options that offers a fixed return. For taxpayers, tax-saving fixed deposits offer tax benefits as well as safety. Interest rates, however, vary from bank to bank. Tax-saving FDs come with a lock-in period of five years. A person cannot withdraw the money from the instrument before the lock-in period in case of any emergency. Loans against tax-saving fixed deposits are not allowed. The interest on FDs will be paid monthly, quarterly, or annually or cumulatively depending on the choice of the customer.
Investments made for five years are tax-exempt under section 80C of the Income Tax Act. The interest earned from a tax-saving FD is taxable. The interest is added to the annual income and is taxable according to the tax bracket.
The interest rates on tax-saving fixed deposits varies from bank to bank. Now banks are offering up to 6.50% interest rate on five-year tax-saving fixed deposits for the general public.
But senior citizens can get 50 basis points more return than the general public.
Take a look at best interest rates which public and private sector banks are offering to common people as well as senior citizens.
Here are five public sector banks promising good returns on tax-saving fixed deposits amount of less than Rs 2 crore.
Private sector banks are also playing a big role in the Indian economy. Some private banks give more return on FDs than major public sector banks. The Deposit Insurance and Credit Guarantee Corporation (DICGC) also insures each depositor in a bank up to a maximum of Rs 5,00,000 for all types of banks.
Here are the top-four private sector banks offering attractive interest rates on tax-saving fixed deposits of less than Rs 2 crore both for the general public and senior citizens. Take a look at the list:
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