Here are 10 tax-saving fixed deposits offering high interest rates

Bank fixed deposits (FDs) are investments for all seasons for most in India. Investors love to park their money in these avenues, given that FDs are safe and returns are certain.

In these uncertain COVID-19 times, bank FDs are also coveted by the elderly or those in their 50s, who want the Section 80C tax benefits, but do not want a high-risk instrument such as a mutual fund scheme or a unit-linked insurance plan.

Regulated by the Reserve Bank of India (RBI), deposits are quite safe. The RBI generally never allows any bank to fail and steps in to shore of depositors’ interests when required.

Select private and small banks offer higher interest

In the last year or so, deposits have carried low interest rates. And the tax-saving FDs come with a lock-in of five years. You can invest a maximum of Rs 1.5 lakh in these FDs. Given the COVID-19 situation, the government has allowed tax-saving investments to be made for FY 2019-20 till June 30.

Moneycontrol brings you the tax-saving FDs that carry the highest interest rates (compiled by BankBazaar). The top 10 FD rates are invariably given by small-sized private sector and small finance banks. Typically, small-sized banks give the highest rates because they need your money more than larger banks that have a much wider depositor base. HDFC Bank and ICICI Bank offer 5.50 percent on their five-year tax-saving FDs while the State Bank of India (SBI) pays 5.40 percent. A sum of Rs 1.5 lakh invested in DCB Bank’s tax-saving FD grows to Rs 2.15 lakh after five years.