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.
this table is last updated on feb 2011. is there any change in this list or it is still applicable as of Jan 2012?
I think u r missing the bank name which is giving best return at present of 9.50% with 5year lock-in in tax saver gold & tax-saver silver scheme for both senior citizen & general public, it’s ” City Union Bank Ltd” from kumbakonam, Tamilnadu.
Thanks – I’ve added City Union Bank in the table now.
Add this to the list :
Axis Bank – 8.25%
(Link : http://www.axisbank.com/personal/interestrates/domesticdepositrates/Domestic-Deposit-Rates.asp?ucode=Personal )
Thanks Rohit – added it now.
hi every one i want to invest for 30000 and i need to choose tax saving plans
Question 1: which one would be better if iam looking to invest for short period
Question2: which one would be better if iam looking to invest for long period
Note: Iam not intrested in Insurance plans.
given the highest returns iam ready to invest in higher amounts and variable period of time .
and the intrest earned should be tax free
Thanks for your suggestions.
Only the income from PPF is tax free, rest of them are all taxable, so that’s your only option (given your conditions).
hi Every one is there any FD which gives completely tax free on intrest earned ?
No, but there are tax free bonds that are coming out these days like the NHAI bond which can give you tax free interest.
Hello,
Please forgive if my question seems lame, i would like to deposit a sum of 10L in fixed deposit for 5 years under monthly returns of intrests(HDFC 8.87%pa).Could you tell me how is that money(interest) taxed and what is the amount i will be getting monthly.
if possible update the rates from major banks. better if standalone fresh post, dear manshu
Dear Sahil – I updated this list recently so they should still be applicable – did you see a rate that was outdated – if so I will spend some time reviewing the whole list else I think they are current. Thanks!
Dear Manshu,
Oriental Bank of commerce is offering 9.75% (+0.5% for senior citizens) for 5 years and Tamilnad mercantile bank is offering 10%(+0.25% for senior citizens) for 5 to 10 years with 5 year lock-in on tax-saving deposits.
Hi,
I have a doubt is the amount put in FD wil have tax excemption or the interest occured alone will have tax excemption ? I jus started an RD acc in citi bank. Can i show it as savings in my Tax ?
Interest is taxable – you have to pay tax on interest. RD can’t be shown as a tax saving instrument.
Hi,
Please tell me if the interest earned on the tax free FD will be taxable when the tax free FD will mature?
Hi
You perhaps have some misconception. This is a tax saver FD and not tax free FD.
This 5 year Tax Saver FD saves you tax like other 80C investments in the year of investment but not saves tax on interest earned. Interest is taxable on yearly basis.
Umesh
Hi Umesh,
I meant Tax saver FD only, it was just a typo error.
Thanks for the info.. ur web page has helped me a lot..
Hi Manshu
I hope that the readers of onemint will find following links useful
A. Get the Highest FD Interest Rates
1. For Fixed Deposits
2. Tax Savings Fixed Deposits
3. NRI Fixed Deposits
http://www.ratekhoj.com/fixed-deposits/index.php
A (a) Fixed Deposit Rates
You can get FD rates based on institution types like banks (Public Sector / Nationalized Banks, Indian Private Sector Banks, Foreign Banks, Cooperative Banks, Post Office Savings Schemes, Companies etc.). You can get interest rates selecting as per deposit period range or you can select specific deposit period for your fixed deposit. You can also search for senior citizen and non senior rates as well. Many banks pay different rates of interest for large deposits, you can select this criteria as well.
The search is broadly categorized in 4 types:
1. FD rates based on institution type/deposit period range
2. FD rates based on institution type/specific deposit period
3. FD rates in selected institutions/deposit period range
4. FD rates in selected institutions/deposit period range
You then fill your search criteria and the resulting table can runs into hundreds of pages. In many cases you have to narrow your search or you have to be specific in your search so that the table may not run in many pages.
You can sort this table as per you choice as per alphabetical list of institutions, period of deposit and rate of interest (highest to lowest) by clicking on the first row of the table.
http://www.ratekhoj.com/fixed-deposits/fixed-deposit-rates/index.php
A (b) Tax Savings Fixed Deposits and other schemes
This web page gives you a selection for schemes that are eligible for tax savings under Sec 80C.
You can choose from the following:
Tax Savings Fixed Deposits in Banks (including rate of interest)
Tax Savings Fixed Deposits in Post Office
Equity Linked Savings Schemes (ELSS)
http://www.ratekhoj.com/fixed-deposits/tax-savings-fixed-deposits/index.php
B. Calculators
Fixed Deposit Interest Calculator – Calculate how much interest payments you can get based on your fixed deposit amount, interest rate and interest payment period.
FD Maturity Calculator – Calculate the maturity amount and effective yield (compound interest rate) of your fixed deposit based on your deposit amount, interest rate and duration
http://www.ratekhoj.com/calculators.php
C. Find Bank IFSC Codes, MICR Codes, Postal Addresses
http://www.ratekhoj.com/banks/index.php
D. Gold Coin Prices Offered by different banks
http://www.ratekhoj.com/goldprice/index.php
Umesh
Thanks Umesh.
Hi Manshu
How can I post or send a compilation in a tabular form particularly for, interest on fixed deposit (FD) for various durations and tax saver FD, of various banks. Also can I post links of other websites in comments?
Thanks
Umesh
The table will not get pasted correctly in the comment box, so if you want something like that to be posted then please email me – onemint at gmail and I will take a look at it. Yeah, please feel free to post any links that you feel are useful to forward the discussion.
Thanks – much appreciated!
Hello Manshu,
I am planning on investing 5L in a FD for a period of 1-2 years. I have a ICICI savings account but I am unsure whether I should invest 4L in FD’s and 1L in Tax Saver FD, because as you mentioned if my interest amount(from 4L(Taxable FD)+1L(Tax free) FD) is more than 1L then the interest will bear tax.Did I understand your logic correctly?
Thanks
Hi Ganesh
Any amount earned as interest is taxable and subject to TDS as per rules, whether earned from a normal FD or from a TAX SAVER FD.
The difference in two types of FD is, the amount invested in Tax saver FD which is of 5 year duration (lock in) is subject to 80C deduction in the year of investment unlike normal FDs and not that it is TAX FREE.
Tax saver FDs has some condition like you can not pledge, can not get loan on it, can not encashed prematurely (being 5 years lock in) unlike normal FDs. One more thing, check the rates of interest for 5 year normal FD and tax saver FD as some pay lower rate of interest for tax saver FD.
Umesh
would be a good idea to update this post given interest rates at peak.
Yeah, I need to update this post regardless of whether interest rates have peaked or not. This data has become quite dated.
How many years a sum of Rs 10000/- will be double in State Bank of India Fixed Deposit Scheme
Hello,
My age is 25 years…
I want to know one thing..
What is the maximum limit I can put my money in Bank FDs?
Ex –
If I invest 1,00,000 in Indian overseas Bank FD in 2012 for one year.. I’ll get matured amount @ 9.25 = 1,09,250..
I keep investing 1,00,000 every year.. and I also put my earned money from FD in another FD @ every maturity…
Is that possible?? and if so, what is the maximum period I can invest??
And Is that a good option considering the childeren education and marriage??
Well, what you can do is to get a fixed deposit for a longer date from whichever bank you prefer – when you go for slightly longer dated terms then you get a higher rate of interest, and then you can use the money from that maturity to reinvest at a later time.
It’s possible to do what you want, but the only thing is when you create a new FD you will get the rates at that time, not today.
Thanks for suggestion…
The thing is I want to invest money for short spans of time…
And other thing… tax(Tax) only deducted from the interest income (if it is bigger than 10,000 Rs)..
Is there any other deductions liable?? (especially on the amount i invest??)
Hi Manshu,
I want to invest Rs. 150,000 either in Fixed deposit for five years or in NSC? Which option will give me better return ? I have been told that 10% tax is deducted from the interest accumulated in the FD. What about tax deduction in NSC?
Hi Rohit,
NCS falls under 80C investments, so you will get tax rebate by investing in NSC upto Rs. 1 lakh, and if you don’t have any other plans to use 80C, then this can be a good way. Interest income is taxable in both instruments now. NSC may not have TDS but the interest is still taxable.
NSC falls under 80C, so you will get deduction by investing in NSC (subject to 1 lakh limit), the interest accrued is also exempted from tax and the interest amount is eligible for 80C deductions (being reinvested ?) (subject to 80C limit) but the main drawback in NSC is (I have learnt ?), the whole amount that you will get on maturity (maturity value), is included in your income and SUBJECT TO TAX. You save on tax @ say 10% and end up paying @ say 10-20% after 6 years.
In tax saver fixed deposit, the lock in period is 5 years and not 6 years (as in case of NSC) though the interest in taxable but currently it will be almost at par with NSC interest (after tax) and the maturity value is is not subject to tax like other FDs (as far as I know).
One more thing I do not understand why so much importance in given to PPF as a tax saving instrument, except the tax earned is tax free. Any comment.
Hi Umesh,
Interest being tax free is a pretty sweet deal for people who fall under the 30% tax bracket and that’s why it’s popular I think.
NSC is now 5 years.
Whether TDS is applicable on interest earned on Taxable FD?
Yes, interest earned is taxable.
Manshu,
If I deposited 10 lakhs in a back that offers 9.00% in a tax saving fixed deposit for 5 years. How much would be taxed from the interest that’s earned each year?
Shankar – the tax benefit is only to the extent that money you invest in this will be reduced from your taxable income. So, once that’s done – the FD is treated as ordinary FD and the interest will be taxable like others.