Updated on Jan 2nd 2013.
I updated my tax saver fixed deposits page today, and I thought I’d create a separate page to record some of the better paying interest rates on these tax saving FDs.
With that in mind, here is a list with some of the best interest rates on fixed deposits that are covered under Section 80C that I could find.
I’m sure there are some that I have missed, so if you know of any banks that pay well, please leave a comment or drop in an email, and I will update the list.orted List
| Bank | Interest Rate |
|---|---|
| City Union Bank | 9.50% |
| State Bank of Travancore | 9.00% |
| IDBI Bank | 9.00% |
| Indian Overseas Bank | 9.00% |
| Vijaya Bank | 9.00% |
| Bank of Baroda | 9.00% |
| State Bank of Hyderabad | 8.75% |
| South Indian Bank | 8.75% |
| SBI | 8.75% |
| Karur Vysya Bank | 8.75% |
| Bank of Maharashtra | 8.75% |
| J&K Bank | 8.50% |
| Central Bank of India | 8.50% |
| Kotak Bank | 8.50% |
| Canara Bank | 8.50% |
| Punjab National Bank | 8.50% |
| ICICI Bank | 8.50% |
| Allahabad Bank | 8.50% |
| Axis Bank | 8.25% |
This is just a list of the best tax saving fixed deposits, but those are not the only instruments that offer you tax saving benefits. There are other instruments and this easy to understand graphic explains them to you.
please help me and tell me the Interest rates on 21/01/2011 on Tax saving Fixed deposit in Panjab and Sind Bank
Don’t have it sorry.
sir, please tell me from where i can get it. actually i got an FD made from above bank. they made it at 7.0% i doubt that rate was higher on that day. now bank peoples are not cooperating. please help me
deepak
Sorry to hear your trouble, the bank will have info on that. I don’t know where else you can find it.
Hi Deepak
I hope your problem must have been solved by now. Generally banks do not make mistakes, but when they are not listening to your complaint may mean something wrong.
If not then you should try to get the right information from other branches of P&SBank in your city and make a complaint to regional and head office of P&SBank, if needed. You can do some homework yourself to get the right information.
Secondly check the Tax saver FD Receipt you got. It should be mentioned clearly that it is a tax saver FD and the normal one.
Hope the following piece of information that I gathered from various sources may be useful for you.
From BSE website
Subject: Change in Interest Rates of Domestic Term Deposits w.e.f. Feb 25, 2011
Announcement: Punjab & Sind Bank has informed BSE that Bank has announced an increase in interest rates of various tenors of Retail Domestic Term Deposits by 0.05% to 1.00% with effect from February 25, 2011. Rate of interest for 46-90 days term deposit of up to Rs. 1 crore has been raised by 1.00% i.e., to 6.50% p.a. Rate of interest for 222 days, 500 days and 1000 days deposit schemes has been raised to 8.75% p.a., 9.55% p.a. and 9.60% p.a., respectively. Further, rate of interest on PSB Fixed Deposit Tax Saver Scheme has also been increased from existing 8.50% p.a. to 9.05% p.a.
Note (from me): {(From this announcement from BSE, one can conclude that the rates prevailing should be 8.50% for Tax saver FD). (if there is no change of rates in between.)}
Excerpts (edited) from a website dealing in financial topics
Punjab and Sind Bank raises base rate, BPLR
Dec 23, 2010
Public sector lender, Punjab & Sind Bank has revised its lending rates. The bank has raised its base rate by as much as 55 basis points. The base rate of the bank now stands at 9% from 8.45% earlier.
(a few lines omitted)
BPLR was replaced by base rate from July 1, 2010.
The bank has also raised fixed deposit rates across selected maturities. The 222 days, 500 days and 1,000 days deposits will now fetch interest of 7.5%, 8.75% and 9% respectively.
Unedited excerpts from an article from a financial newspaper
Punjab & Sind Bank raises deposit rates by up to 0.75 pc
PTI Aug 11, 2010, 07.08pm IST
NEW DELHI: State-owned lender Punjab & Sind Bank on Wednesday announced an increase in interest rates on fixed deposits (FDs) of different maturities by up to 0.75 per cent per annum.
The new rates will be effective from August 4, the bank said in a release.
The new deposit rates range from 2.50 per cent to 7.50 per cent on FDs of 7 days to 10 years’ tenor, said a bank official.
Punjab and Sind Bank’s decision to hike deposit rates follows similar steps taken by leading banks like ICICI Bank, Punjab National Bank, Union Bank of India, Oriental Bank and HDFC Bank.
Note (from me): Many banks pay less interest on the Tax Saver FD in comparison to normal FD of 5 year duration
Now on the basis of above you can make your own conclusion.
Thank you sir, i m very thankful to you for the time you have spent searching the answer for my query. Thank you again.
I had contacted bank 3-4 times by personally visiting the bank also but due to their fault they are very uncooperative to talk about it. Ultimately at that time, finding no other alternative, i left this matter.
OBC Bank gives 9.5 %
is it true that returns on the term deposits offered by private sector banks is higher as compared to public sector banks?
No, not necessarily, it’s imp to do a little bit of research at that point in time and see who is offering the best rate.
^ http://www.tmb.in/d_taxsaving.htm ( Tamilnad Mercantile Bank Ltd )
Hi Kiran,
Do we need a savings account with TMB before investing in a tax saving term deposit?
Hi,
Is it safe to invest in tamilnad mercantile bank ltd fixed deposit?
Ajay – up to Rs. 1 lakh is insured by RBI, and the bank has been okay, so it seems to be okay.
Thank you Manshu
rate of interest in tmb tsd- (mullai) for tax saver scheme is 9.75%. this is for ur kind information. any way thanks for ur data
Hey Thanks Ramesh. I’m not familiar with this bank – can you please send the link to their website so I can update info from that.
http://www.tmb.in/d_taxsaving.htm ( Tamilnad Mercantile Bank Ltd )
Thanks Kiran.
The 5 year Tax saving FD rate in Karnataka Bank is same as Kotak Bank
I’ll update the post this coming weekend.
Hi
what is the difference between Tax saving FDs and normal FDs and how they are different. can you please illustrate with an example.
regards
Varma
Tax saving FDs are fixed deposits that allow a deduction of the amount you put in the FD from your taxable income. They are covered under 80C. You can look at this post to get an idea of other options under 80C and how the calculation is done.
http://www.onemint.com/2011/01/05/section-80c-tax-saving-schemes/
9.80 % is rate of interest offered by Corporation Bank on Tax Saver FD for Senior Citizens
It is desirable to review and update the rates of Interest atleast once in a fortnight to make the information more useful
Thanks for that info – I’ll update the post this weekend.
State Bank of Bikaner and Jaipur gives 9.00% in tax saving deposit, so does Karur Vysya Bank.
Thanks Pran – I’ll update the post with this info a little later in the week.
I want to know best mode of investment for saving under 80C, comparing tax saver FD, ELSS, NSC, MIS and others.
PLEASE SUGGEST
Hmmm, I’ve not done that comparison yet, and don’t know an answer to that – sorry. a little busy these days, so probably won’t get time to get to it.
Amongst the Options provided by you, Tax Saver FD with Bank is a good one.
If you can afford to take some risk, go for ELSS. However I would give first priority to PPF since 8 % interest earned is tax free.
Dear Sir,
My wife is house wife and i have taken the lic policy on her name so please guide me that should i take that amount in tax saving or not.
Ajay,
I checked this with someone and he told me that a husband can claim lic premium paid on behalf of his wife as a deduction from his income provided the wife is not claiming the same & the premium is paid by husband only.
Yes
Yes. Premium paid for spouse and children could be claimed
It’s tax season time. Check out Karnataka bank which gives tax saving FD for 9.00% and will top the TAX SAVING LIST
Thanks for the info Dinesh.
Hi Manshu,
What is your opinion about investing money in NSC tax saving?
can you tell me what is the rate of interst on NSC?
Dipak – The interest comes to about 8.15% and maturity period is 6 years. Here is the link to their webpage.
http://www.indiapost.gov.in/netscape/6yearsNSC.html
You can compare this with a tax saving FD and see if it makes sense or not.
lakshmi vilas bank 500 days=9.6%,600 days=9.75%
Thanks for that info Ankit.
lakshmi vilas bank
HI Manshu,
I’m really confused over investing 20k in infra bonds OR 20k in Tax FD (lacking 18k for 1L limit) for a period of 5 yr, tax bracket 30.
Can you provide any comment?
Thanks.
Kunal,
Personally, I’d opt for the fixed deposit, and here is my thinking behind it:
1. First and foremost, you get tax saving FDs that pay higher than the bonds, and there is a possibility that even these rates might get hiked in a few more days. So even though the absolute sum won’t be very high, one point in favor of the tax saving fixed deposit.
2. When you have the option available within your 80C (1 lakh) limit then use that up, and keep the option of infra bonds open in case you find that you can invest in them later on.
3. You will have to wait a little bit to get the investment proof, and then some people have faced the issue where the allotment advice has been sent to their old addresses, or the bonds are in the wrong name, or other issues to produce proof of payment.
4. There are some other issues that people have faced like a person wanted to close their Demat account, but since the infra bonds they owned were locked – in – they couldn’t do it right away.
5. The bank fixed deposits are more secure than the unsecured infrastructure bonds, although a situation where such companies will come to a point where they default on their bonds is unlikely.
So, I’d personally make a decision keeping all these points in mind.
I think they should increase. RBI will hike the interest rate to help curb inflation.
Yeah, RBI’s rate hike seems to be a foregone conclusion with a lot of folks – I’m tired of hearing how many people are saying RBI is behind the curve when in fact they have been doing an awesome job, and a much better job than most other countries.
Manshu,
Do you think these deposit rates will go up after RBI’s policy review on Jan 25th. It is widely believed that there will be a 25 basis point hike.
Krish – My personal observation is that some of these tax saving FD rates are a bit more sticky than others, and I noticed when I was updating the list that some banks have not updated their rates from the last time (which was quite a few months ago), and RBI has made already what 6 upwards revisions since last year?
So, my thoughts are, yes, wait for the upward move, and then a few days after it, but then don’t count on it too much.