Income tax-saving fixed deposit (FD), a special category of FD, help investors claim deductions under Section 80C of the Income Tax Act. According to the current Income Tax (I-T) law, a taxpayer can claim maximum tax deductions of up to Rs 1.5 lakh under Section 80C in a financial year. From state-run State Bank of India (SBI) to private sector peers HDFC Bank and ICICI Bank, major commercial banks pay interest at the rates of 6.60-7.00 per cent to the general public, and 7.10-7.75 per cent to senior citizens, on tax-saving fixed deposits, according to their websites.
Given below are key things to know about Income tax-saving fixed deposit (FD) accounts:
Also known as tax-saving fixed deposit or tax-saving FD, this special type of fixed deposit scheme allows a minimum maturity period of five years and a maximum of 10 years.
Here's a comparison of interest rates offered by major banks on income tax-saving FDs of up to Rs 2 crore:
|General public||Senior citizen|
|State Bank of India||6.60%||7.10%|
(As mentioned on their websites)
Lenders do not allow premature withdrawal from this type of FD accounts before completion of the lock-in period of five years.
A maximum investment of Rs 1.5 lakh in a financial year is allowed in income tax-saver five-year fixed deposit. SBI allows a minimum deposit of Rs 1,000 for investment in its tax-saving scheme, according to the bank's website - sbi.co.in. Any amount in the multiple of Rs 1,000 not exceeding Rs 1.5 lakh a year is allowed by the bank.