The deadline for tax-saving investments for FY22 ends on 31 March 2022, which leaves barely a couple of weeks for those who are yet to get going. Invest wisely, considering your financial goals. Risk-averse investors can look at tax-saving fixed deposits (FDs). Amid falling interest rates, smaller private banks offer interest rates of up to 6.5 percent on tax-saving FDs, data compiled by BankBazaar shows. Here are the banks offering the best interest on tax-saving deposits:
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Investments of up to Rs 1.5 lakh can be claimed for tax deduction under section 80C of the income tax Act but don’t just invest to save tax. Your tax–saving FDs must fit your financial plan. Tax-saving FDs have a lock-in period of five years and premature withdrawals are not allowed.
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IndusInd Bank offers interest rates of up to 6.5 percent on tax-saving deposits. Among private banks, IndusInd Bank offers the best interest rates. A sum of Rs 1.5 lakh invested grows to Rs 2.07 lakh in five years.
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RBL Bank is offering interest rates up to 6.3 percent on tax-saving deposits. A sum of Rs 1.5 lakh grows to Rs 2.05 lakh in five years.
IDFC First Bank and Yes Bank offer interest rates up to 6.25 percent on tax-saving deposits. A sum of Rs 1.5 lakh grows to Rs 2.05 lakh in five years.
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DCB Bank is offering interest rates of up to 5.95 percent on tax-saving deposits. A sum of Rs 1.5 lakh grows to Rs 2.02 lakh in five years.
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Karur Vysya Bank is offering interest rates up to 5.90 percent on tax-saving deposits. A sum of Rs 1.5 lakh grows to Rs 2.01 lakh in five years.
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These smaller banks are offering higher interest rates to garner new deposits. The Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI, guarantees investments in fixed deposits of up to Rs 5 lakh.
The data as of 2 March 2022 has been compiled from websites of the banks. BankBazaar has accounted for FDs belonging to only those foreign, private, small finance and public sector banks that are listed on the BSE. Banks, for which data is not available on their websites, were not considered. The rates are for tax-saving five-year FDs for non-senior citizens.
Hiral Thanawala is a personal finance journalist with 9 years of reporting experience. Based in Mumbai, he covers financial planning, banking and fintech segments from personal finance team for Moneycontrol.
