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Tax Saving FD Rates

About Tax Saving FD Rates

It can be said without a doubt that a fixed deposit is an excellent investment option that comes with basically no risks. Fixed deposits are safe, flexible, come with a predefined rate of interest, and have guaranteed interests.

However, there is another type of FD available in the market that has been very popular. This FD is known as the tax saving FD. The best tax saving FD provides the depositor with a tax deduction according to Section 80C of the Income Tax Act, 1961.

Under Section 80C of the Income Tax Act, 1961, taxpayers are allowed to avail certain tax deductions on their earned income. The only condition here is that the individual must have made the investment under Section 80C.

With the help of an FD tax exemption policy, individuals can get a tax deduction of up to INR 1.5 lakh under Section 80C of the Income Tax Act, 1961. An FD tax exemption policy also comes with a mandatory lock-in period of 5 years. The tax saving FD rates can also vary from 5.5% to 7.75%.

Features of Best Tax Saving FD

When it comes to opening an FD tax exemption policy, then there are many features of this scheme that you should know about. Let’s take a look at these features by going through the list given below.

  • FD tax exemption policies have a fixed maturity period of 5 years
  • An FD tax exemption account can be opened with a minimum investment of INR 100
  • The maximum amount of investment in a given year is INR 1.5 lakh
  • There are predefined or pre-issues tax saving FD rates
  • For joint FD accounts, only the primary account holder is entitled to the FD tax benefit
  • Since the individual is already receiving the FD tax benefit, it is not possible for one to make a premature withdrawal
  • Loan facility is not available in an FD tax exemption policy
  • The tax saving FD rates are higher than the interest rates applicable in savings accounts
  • An FD tax exemption plan can be opened by Hindu Undivided Family (HUF)


Tax Saving FD Rates

In this section, we’ll take a look at the top 10 FD tax exemption schemes in India.

Bank FD Tax Exemption Interest Rate for General Public Interest Rate for Senior Citizens
State Bank of India 5.30% 5.80%
ICICI Bank 4.30% 4.30%
HDFC Bank 5.30% 5.80%
IDFC Bank 5.75% 6.25%
PNB Bank 5.30% 5.80%
Deutsche Bank 5.50% 5.50%
Axis Bank 5.40% 5.90%
DCB Bank 6.75% 7.25%
Bank of Baroda 5.25% 5.75%
Lakshmi Vilas Bank 5.50% 6.00%

Benefits of Best Tax Saving FD

Now that you are familiar with the answer to the question of how much amount FD interest is tax free, the next step is to learn about FD tax benefits. These FD tax benefits are discussed below.

  • FD tax benefit schemes are easily available across most banks in India
  • You can avail of a tax deduction of up to INR 1.5 lakh
  • The interest is paid out on a monthly or quarterly basis
  • Senior citizens get better FD tax benefits
  • FD schemes are considered as safe and secure investment options for a medium tenure


Out of all these FD tax benefits, what is the most important benefit for you? Is it the answer to the question of how much amount FD interest is tax free?

Types of Best Tax Saving FD

The different types of tax saving FDs are:

  • Tax saving FDs for the general public
  • Tax saving FDs for senior citizens


Eligibility of Best Tax Saving FD

Apart from knowing the answer to the question of how much amount FD interest is tax free, it is also important to learn about the eligibility criteria of FDs. To open an FD account in India, one must fulfill the following criteria.

  • Should be an Indian resident
  • Individuals
  • Hindu Undivided Families (HUF)
  • Be willing to open a tax saving FD single or joint account


How to Calculate Tax Saving FD Rates

If you want to find out the exact answer to how much amount FD interest is tax free, then you can simply use a tax saving FD calculator for that. The FD calculator tool will give you the exact amount that you will get after investing in a tax saving FD scheme.

Factors Affecting Tax Saving FD Rates

It is true that there is a more or less a fixed answer to the question of how much amount FD interest is tax free. However, you should still know that there are many other factors that can have a lot of effect on fixed deposit interest rates. Some of the factors are:

  • Total Amount: As a general rule of thumb, the larger the amount one invests in an FD, the higher will be the return on that investment. Some banks allow customers to open FD accounts with just INR 10,000 or even lower. In most FD accounts, there is no upper limit to the investment.
  • Renewal: Investors can also get higher interest rates on their fixed deposits if they opt for an auto-renewal facility. This eliminates the need to keep track of the renewal dates and makes it easier for an individual to maintain the scheme.
  • Age: When it comes to determining the interest, then the age of the investor also plays an important role. Senior citizens are more likely to earn a higher interest rate as compared to other investors.
  • Economic Conditions in India: The current economic conditions in the country play a big role in determining the FD interest rates offered by the bank. Apart from this, the monetary and fiscal policy of the country also has a significant amount of sway on the interest rates of fixed deposit schemes being offered in the country.



What is the minimum amount that I need to open a tax saver FD account?

Most banks these days require individuals to open a tax saver FD account with at least INR 100.

What is the range of maturity that is applicable for a tax saver fixed deposit scheme?

A tax saver fixed deposit scheme comes with a tenure range of 5 years to 10 years.

Is the interest income earned through an FD free from taxation?

No, the interest is taxed under TDS.

I’m a senior citizen. Do I get a different FD rate for tax saving FD schemes?

Yes, most banks provide an additional FD interest rate to senior citizens.

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