Updated: March 9, 2021 4:48:12 pm
Tax Saving FD Interest Rates 2021: We are in the last month of the ongoing financial year 2020-21 (FY21) and for many of us, these are the last few days to make our tax-saving investments. Today we’ll take a look at five-year tax-saving fixed deposits (FDs).
Speaking of FDs, these are one of the most popular financial instruments which are used by many of us for savings. Not only savings, but people can also use this instrument for the tax-saving purpose under Section 80C of the Income Tax Act.
Many people also prefer tax-saving FDs over other instruments such as public provident fund (PPF), equity-linked saving schemes (ELSS), unit link insurance plans (ULIP) and so on mainly due to the convenience and guaranteed returns.
Now we must note that tax-saving FDs offer a maximum deduction of Rs 1.50 lakh under Section 80C of the Income Tax Act and the maximum deposit that is permissible is Rs 1.50 lakh. These FDs come with a lock-in period of five years. And like all other term deposit rates, senior citizens are offered a slightly additional interest rate.
It also must be noted that even though you are doing an FD for the purpose of saving tax, the banks deduct TDS at the rate of 10 per cent on the annual interest earned on such FDs. In case if you are exempt from paying tax, then you are required to submit form 15G/H at the starting of the new financial year with the bank.
Here are the best interest rates that are being offered by some banks on 5-year tax-saving FDs:
|Bank||Rate of interest (regular)||Rate of interest (senior citizens)|
|AU Small Finance Bank||6.50||7.25|
|City Union Bank||6.00||6.00|
|Source: Data available on respective banks’ website|
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