Tax-saving FDs: These banks offer up to 7.6% interest rate
If you haven’t started your tax planning, do it now as we are just a few weeks away from March 31. Risk-averse investors and those in lower tax brackets can look at tax-saving fixed deposits.
Do not procrastinate your tax planning. If you haven’t started your tax planning, do it now as we are just a few weeks away from March 31, the end of the financial year. Invest wisely, considering your financial goals. You can achieve your tax planning goals by investing in existing commitments, which might include your 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 life insurance premium.
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Risk-averse investors and those in lower tax brackets can look at tax-saving fixed deposits (FDs). Several banks have raised interest rates on tax-saving FDs after six consecutive repo rate hikes by the Reserve Bank of India (RBI) in this financial year. Small finance banks and smaller and new private sector banks now offer rates up to 7.6 percent on tax-saving FDs, data compiled by BankBazaar shows.
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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. Tax-saving FDs have a lock-in period of five years and premature withdrawals are not allowed.
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DCB Bank offers interest rates of up to 7.6 percent on tax-saving deposits. Among the private banks, it offers the best interest rates. A sum of Rs 1.5 lakh invested with the bank will grow to Rs 2.19 lakh in five years.
Suryoday Small Finance Bank offers interest rates of up to 7.5 percent on tax-saving deposits. Among the small finance banks, this bank offers the best interest rates. An amount of Rs 1.5 lakh invested here for five years will give a return of Rs 2.17 lakh.
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IndusInd Bank offers interest rates of up to 7.25 percent on tax-saving deposits. A sum of Rs 1.5 lakh invested here will grow to Rs 2.15 lakh in five years.
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Ujjivan Small Finance Bank and AU Small Finance Bank offer interest rates of up to 7.2 percent on tax-saving deposits. An investment of Rs 1.5 lakh will see a return of Rs 2.14 lakh in five years.
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Deutsche Bank offers interest rates of up to 7 percent on tax-saving deposits. Among the foreign banks, it offers the best interest rates. Rs 1.5 lakh invested here will yield Rs 2.12 lakh in five years.
Several banks, including Axis Bank, City Union Bank, HDFC Bank, RBL Bank, IDFC First Bank, ICICI Bank and Yes Bank offer interest rates of up to 7 percent on tax-saving deposits. A sum of Rs 1.5 lakh will give a return of Rs 2.12 lakh in five years.
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The smaller private banks and small finance banks are offering higher interest rates to garner newer 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.
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Data compiled as of March 2, 2023, from respective banks' websites. BankBazaar has accounted for FDs belonging to only those foreign, private, small finance and public sector banks that are listed on the BSE. Banks. These rates are only 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.
