Major banks like State Bank of India (SBI), ICICI Bank, HDFC Bank and Axis Bank offer the option of income tax-saving fixed deposits. With effect from April 20, HDFC Bank revised interest rates on its tax-saving fixed deposits. With effect from april 17, ICICI Bank revised interest rates on tax-saving fixed deposits. Tax-saving fixed deposits (FDs) help you claim income tax deduction under the Section 80C of the Income Tax Act. Fixed deposits, which help save on the income tax outgo require a lock-in period of five years. Premature withdrawals are barred from tax-saving fixed deposits.
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The interest income earned on income-tax saving FDs is taxable as per an investor's tax bracket. Interest on income tax-saving deposits is payable on a monthly/quarterly basis. The interest amount earned can be reinvested, if the investor wants to do so. However, in case of joint deposit, the tax benefit under Section 80C will be available only to the first holder of the deposit.
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Here are the interest rates offered on tax-saving FDs by SBI, ICICI Bank, HDFC Bank and Axis Bank:
Tax-saving fixed deposits interest rates of State Bank of India (SBI)
State Bank of India's tax-saving scheme requires an investor to deposit a minimum amount Rs. 1,000 or multiples thereof. The maximum deposit should not exceed Rs. 1,50,000 in a year, SBI said on its website, sbi.co.in. The minimum tenor is five years and the maximum is 10 years for the fixed deposit account. The following are the interest rates on deposits below Rs. 1 crore:
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