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DCB Bank and Yes Bank offer the best interest rates on tax-saving deposits

DCB Bank and Yes Bank offer 6.75% interest on five-year tax-saving deposits, while SBI offers 5.40%

January 29, 2021 / 11:57 AM IST

It’s that time of the year when salaried employees scramble to make last-minute tax-saving investments for the financial year 2020-21. The investment decisions should be taken considering your financial goals. However, it is not too late, as you have a couple of months’ time to plan for your tax-saving investments and avoid a last-minute rush.

The equity markets are volatile and valuations seem excessive. Lump-sum investments in equity linked savings scheme (ELSS) for tax-saving may be risky. An investment in five-year tax-saving fixed deposits (FDs) offers solace to investors in this scenario. Also, investors prefer fixed deposits (FDs) as returns are certain. Those in the lower tax brackets find bank FDs more attractive.

By investing in these FDs, you can take the section 80C tax deduction benefit. Investments up to Rs 1.5 lakh can be claimed for tax deduction under section 80C of the income tax act. Tax-saving FDs have a lock-in period of five years and premature withdrawals are not allowed.

Even though bank FD rates have fallen to low levels, there are some banks that offer you attractive interest rates.