Tax-saving FDs: These banks offer interest rates of up to 7%

The season of tax-planning is upon us. Ideally, you ought to have started long back, but if you haven’t yet started your tax planning, now is the time as March 31 is the last date to make tax-saving investments for the financial year 2023-24. Already most employers have started asking employees to submit their investment proofs. Choose your investment wisely, depending on your risk profile and financial goals. Your options include Public Provident Fund (PPF), National Pension Scheme (NPS), Sukanya Samriddhi Yojana (SSY), monthly SIP in equity-linked savings schemes (ELSS), Employees’ Provident Fund (EPF) or by paying life insurance premiums.

Risk-averse investors and those in lower tax brackets can look at tax-saving fixed deposits (FDs).

We've taken the 10 largest banks by deposits and  rates have been considered only for those deposits of less than Rs 1 crore. The value is calculated on the basis of quarterly compounding of interest. Here are the top 10 banks by term deposit holdings considered for tax-saving FDs. Bankbazaar has compiled the data. The data as of January 24, 2024.

Axis Bank, HDFC Bank and ICICI Bank offer interest rates of up to 7 percent on tax-saving deposits. Among the private banks, these banks offer the best interest rates. A sum of Rs 1.5 lakh invested here will grow to Rs 2.12 lakh in five years.

Canara Bank offer interest rates of up to 6.7 percent on tax-saving deposits. Among the public sector banks, these bank offers the best interest rates. A sum of Rs 1.5 lakh invested here will grow to Rs 2.09 lakh in five years.

Leading public sector banks, which include the State Bank of India (SBI) and Bank of Baroda, offer interest rates of up to 6.5 percent on tax-saving deposits. Other banks offering interest rates of up to 6.5 percent on tax-saving deposits are Punjab National Bank and Union Bank of India. A sum of Rs 1.5 lakh invested here will grow to Rs 2.07 lakh in five years.

Indian Bank offers interest rates of up to 6.25 percent on tax-saving deposits. A sum of Rs 1.5 lakh invested here will grow to Rs 2.05 lakh in five years.

Bank of India offers interest rates of up to 6 percent on tax-saving deposits. A sum of Rs 1.5 lakh invested here will grow to Rs 2.02 lakh in five years.

The Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI, guarantees investments in fixed deposits of up to Rs 5 lakh.