Investors prefer tax-saving FDs to take the advantage of the section 80C tax benefit. Under section 80C of the income tax act, contributions up to Rs 1.5 lakh can be claimed for deduction. Investors of tax-saving FDs can make contributions for a 5-year lock-in period, but they are not allowed for making premature withdrawals. Smaller financial institutions provide interest rates on tax-saving FDs of up to 6.95 per cent. Such interest rates on tax-saving FDs are higher if we compare to public sector banks of India. DCB Bank takes the top spot with 6.95% return, backed by private banks such as IDFC First Bank, IndusInd Bank, Yes Bank and RBL Bank promising 6.5-6.75% interest on tax-saving FDs for five years.Private banks like Axis Bank, ICICI Bank and HDFC Bank provide returns on tax-saving FDs at 5.50 per cent, 5.35 per cent, and 5.30 per cent, respectively. Punjab and Sind Bank rank in the top with 5.55 per cent interest among public sector banks, accompanied by State Bank of India and Bank of Baroda providing 5.40 per cent and 5.30 per cent on tax-saving FDs, respectively. The Deposit Insurance and Credit Guarantee Corporation (DICGC), an affiliate of RBI, offers deposits in FD up to Rs 5 lakh. The below-categorised table contains tax-saving FDs with interest rates (for non-senior citizens) with a term of five years.
|Sr.No||Bank||Interest Per Annum|
|2||IDFC First Bank||6.75%|
|6||Punjab and Sind Bank||5.55%|
|7||State Bank of India (SBI)||5.40%|
|8||Bank of Baroda||5.30%|