Fixed deposit to save income tax: check the interest rates offered by these major banks

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Premature withdrawals are not allowed in fiscal term deposits.

When it comes to tax-saving investments, term deposits remain the preferred option for clients despite falling interest rates. Tax savings deposits are a good way to get the tax deduction under Section 80C of the Income Tax (IT) Act 1961. This is also known as fixed deposit (FD) and is a special type of fixed deposit. because it allows a minimum maturity of five years and a maximum of 10 years. A premature withdrawal is not allowed in this type of FD account before the end of the five-year blocking period. (Also read: Section 80C Deductions: Your Guide to the Most Common Tax Benefits)

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Tax-saving fixed deposit systems are offered by almost all major banks, including State Bank of India, ICIC Bank, HDFC Bank, and Punjab National Bank. The interest rate currently varies from bank to bank within a range of 5.25% to 5.50% for the general public and 6.00% to 6.30% for seniors.

Here is a comparison of interest rates offered by major banks on income tax saving FDs up to Rs 2 crore:

Bank Interest rate
General public Senior citizen
National Bank of India 5.40% 6.20%
National Bank of Punjab 5.25% 6.00%
HDFC Bank 5.50% 6.25%
ICICI Bank 5.50% 6.30%
(Source: Bank websites)

Investors mainly rely on term deposits because they are banking investments and also because of their low risk and safe nature. Currently, Article 80C of the Information Technology Act provides for the deduction of up to Rs 1.5 lakh from personal taxable income during a financial year under certain conditions. Or in other words, depositors can claim a deduction of up to Rs 1.5 lakh by investing in tax saving deposits. The income tax service returns additional taxes if they are paid on investments in life insurance, the national pension system (NPS), the provident fund (EPF and PPF), the national certificate of savings (NSC) and tax-reduced fixed deposits.

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