Tax optimization should always be a part of your financial plan and not a task to be completed towards the end of the year. Invest wisely, considering your financial goals. Those in the lower tax brackets find bank FDs more attractive. Amid falling interest rates, small finance banks and smaller private banks offer interest rates of up to 6.75 percent on tax-saving FDs, as per data compiled by BankBazaar. Here are the top five 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. Tax-saving FDs have a lock-in period of five years and premature withdrawals are not allowed.
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Suryoday Small Finance Bank offers interest rates of up to 6.75 percent on tax-saving deposits. Among small finance banks, Suryoday offers the best interest rates. A sum of Rs 1.5 lakh invested grows to Rs 2.10 lakh in five years.
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Yes Bank is offering interest rates of up to 6.5 percent on tax-saving deposits. Among private banks, this bank offers the best interest rates. A sum of Rs 1.5 lakh grows to Rs 2.07 lakh in five years.
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.
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Deutsche Bank offers up to 6.25 percent on tax-saving deposits. Among foreign banks, Deutsche offers the best interest rate. A sum of Rs 1.5 lakh grows to Rs 2.05 lakh in five years.
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Ujjivan Small Finance Bank also gives interest rates of 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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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.
Data compiled as of October 6, 2021 from respective banks' website. BankBazaar has accounted for FDs belonging to only those foreign, private, small and public sector banks that are listed on the Bombay stock exchange. Banks, for which data is not available on their respective websites, were not considered. These rates are only of 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.
