Income Tax-Saving Bank Fixed Deposits (FDs): SBI, ICICI Bank, HDFC Bank Rates Compared

Investment in income-tax saving bank fixed deposits or FDs can help you claim deductions for investments up to Rs 1.5 lakh a year under Section 80C of the Income Tax Act.  Many banks - including SBI (State Bank of India), ICICI Bank and HDFC Bank - offer tax-saving fixed deposits. Many banks  also offer online facilities to  open tax-saving fixed deposits, for the convenience of their customers. According to current income tax laws, the amount invested in tax-saving fixed deposits is deducted from your gross total income for calculating taxable income. 
 

10 Things To Know About Income-Tax Saving Bank Fixed Deposits (FDs)

 
According to SBI's website, the minimum amount required to open an income-tax saving fixed deposit with the bank is Rs 1,000. The deposit should not exceed Rs 1.5 lakh a year.

SBI offers tax-saving deposits at a minimum tenure of five years and a maximum of 10 years, according to the bank's website.

Remember that interest earned in income-tax saving FDs is taxable as per the investor's tax bracket.

TDS or tax deducted at source is applicable on the interest earned. TDS becomes applicable when interest payable or reinvested on fixed deposits across all branches, per customer, exceed Rs 10,000 in a financial year.

Interest on income tax-saving deposits is payable on a monthly/quarterly basis. The interest amount earned can be reinvested, if the investor wants so.

In case of joint deposit, the tax benefit under Section 80C will be available only to the first holder of the deposit.

Interest rates on tax-saving FDs by SBI, ICICI Bank and HDFC Bank, as shared by the banks on their websites.

 

Banks	Minimum Tenure	Minimum Amount	Maximum Amount	Interest Rate For General Public	For Senior Citizens
SBI	5 years	1000	150000	6%	6.50%
ICICI Bank	5 years	10000	150000	6.50%	7%
HDFC Bank	5 years	100	150000	6%	6.50%

SBI, for example, pays the same interest rate on income-tax saving deposits as that of normal fixed deposits. SBI currently pays an interest rate of 6 per cent on normal fixed deposits or term deposits for maturity between 5 years and 10 years. Senior citizens get a higher interest rate of 6.50 per cent.

Tax-saving fixed deposits have a lock-in period of five years. No premature withdrawals or loans are allowed. 

Nomination facilities are available in case of income tax-saving fixed deposits.