These 5 Tax Saving Fixed Deposits Offer interest rates up to 6.75%

Top and Best Tax Saving Fixed Deposits with higher interest5 Best Tax Saving Fixed Deposits Offer interest rates up to 6.75%


There are a number of tax saving options u/s 80c. While ELSS mutual funds have lowest lock-in period of 3 years, the returns are not guaranteed. If you are a low risk investor and looking for safe returns you can opt to tax saver fixed deposits. You can also opt for a quarterly interest payout if you need regular income. If you invest Rs 1.5 Lakhs in these tax saver FD schemes, one would get up to Rs 2.1 Lakhs along with income tax exemption u/s 80c. Which is the best tax saving fixed deposits scheme? Which tax saver fixed deposit would provide highest maturity value in 5 years?

Also Read: List of Tax Saving investments and deductions u/s 80c

What are Tax Saving Fixed Deposits?

There are several investment options  to save income tax u/s 80c. Each one has its own pros and cons. If you are a low risk investor and looking for safe and fixed income through these tax saving options, you can invest in tax saver fixed deposits. These are offered by banks,post office and also NBFCs. In this article we would avoid tax saver FDs of NBFC as these are high risk and not covered under deposit insurance.

Features of Tax Saving Fixed Deposits

Here are the key features of these fixed deposits

1) Tax saver fixed deposits have a fixed tenure of 5 years. You cannot withdraw your money before completion of this tenure

2) These tax saver fixed deposits offer fixed interest rates for 5 years. Means interest rates would not change every year.

3) Tax saving fixed deposit maturity amount is known up front at the time of investing in these FDs.

4) Investment in these tax saving fixed deposits are eligible for income tax deduction u/s 80c up to Rs 1.5 Lakhs. While you can invest in these FDs for more than Rs 1.5 Lakhs, one would not get tax exemption beyond this limit.

5) FD interest received on these tax saver fixed deposits need to be added to investors total income and necessary income tax has to be paid. One need to add this to “Income from other sources” and pay income tax based on individual income tax slab.

6) Senior Citizens would get 0.5% higher interest rates compared to regular FD investors.

7) If the Tax saver FD is opened for joint accounts, the only primary holder would get the tax benefit.

8) These deposits are covered under deposit insurance up to Rs 5 Lakhs. Means if something happens to the bank and it gets shut down, DICGC (deposit insurance corporation) would pay up to Rs 5 Lakhs which includes principal + interest.

5 Tax Saving Fixed Deposits with interest up to 6.75%

Here is the list of tax saving fixed deposits that are offering the highest interest rate for regular investors  as well to senior citizens. We have also provided yield and the approximate maturity amount.

1) Best Tax Saving Fixed Deposits – Regular Investors

Bank / PO Interest Rates % Effective Yield % Rs 1.5 Lakh would grow to
DCB 6.75% 7.95% 209,625
India Post Office 6.70% 7.90% 209,250
IndusInd Bank 6.50% 7.61% 207,075
Yes Bank 6.75% 6.92% 201,900
RBL Bank 6.40% 6.56% 199,200

2) Best Tax Saving Fixed Deposits – Senior Citizen Investors

Bank Interest Rates % Effective Yield % Rs 1.5 Lakh would grow to
DCB 7.25% 8.65% 214,875
IndusInd Bank 7.00% 8.30% 212,250
India Post Office 6.70% 7.90% 209,250
Yes Bank 7.50% 7.71% 207,825
RBL Bank 6.90% 7.08% 203,100
7.15% Power Finance Corporation NCD Bonds Jan-2021 issue - Review

5 Tax Saving Fixed Deposits with interest up to 6.75% – Detailed View

Now let us get into more info about these tax saving fixed deposit schemes

#1 – DCB – Tax Saver FD Scheme – 6.75 % interest rate

Here are the features of this FD scheme.

Default tenure of this tax saver FD is 5 years.

For regular investors, this tax saver FD scheme offers 6.75% interest and 7.95% Yield. If you invest Rs 1.5 Lakhs in this FD scheme, the maturity amount would be Rs 209,625 in 5 years.

For Sr Citizens this tax saver FD scheme offers 7.25% interest and 8.65% Yield. If you invest Rs 1.5 Lakhs in this FD scheme, the maturity amount would be Rs 214,875 in 5 years.

No premature withdrawals allowed for this 5 year FD scheme.

One can opt for quarterly interest payout or quarterly interest compounding.

One can invest between Rs 10,000 to Rs 1.5 Lakhs in a financial year.

The bank would deduct necessary TDS. You can submit form-15G and 15H. if applicable to avoid TDS.

One can claim income tax benefit u/s 80c up to Rs 1.5 Lakhs in a financial year.

These FDs cannot be pledged to avail any loan.

#2 – India Post Office 5 years Term Deposit – 6.7% interest rate

Here are the features of post office term deposit for 5 years.

Default tenure of this FD is 5 year period.

For regular investors, this tax saver FD scheme offers 6.7% interest and 7.9% Yield. If you invest Rs 1.5 Lakhs in this FD scheme, the maturity amount would be Rs 209,250 in 5 years.

For Sr Citizens the above rates are same and no extra paid.

One can opt for yearly interest payout or quarterly interest compounding.

One can invest between Rs 1,000 to Rs 1.5 Lakhs in a financial year.

The bank would deduct necessary TDS. You can submit form-15G and 15H if applicable to avoid TDS.

One can claim income tax benefit u/s 80c up to Rs 1.5 Lakhs in a financial year.

These FDs can be pledged to avail any loan.

#3 – Indus Tax Saver Scheme – 6.5% interest rate

Here are the features of this Indusind Bank tax saver FD scheme.

Default tenure of this tax saver FD is 5 years.

For regular investors, this tax saver FD scheme offers 6.6% interest and 7.61% Yield. If you invest Rs 1.5 Lakhs in this FD scheme, the maturity amount would be Rs 207,075 in 5 years.

For Sr Citizens this tax saver FD scheme offers 7% interest and 8.3% Yield. If you invest Rs 1.5 Lakhs in this FD scheme, the maturity amount would be Rs 212,250 in 5 years.

No premature withdrawals allowed for this 5 year FD scheme.

One can opt for monthly, quarterly, half yearly and yearly interest payout or quarterly interest compounding.

One can invest between Rs 25,000 to Rs 1.5 Lakhs in a financial year.

The bank would deduct necessary TDS. You can submit form-15G and 15H if applicable to avoid TDS.

One can claim income tax benefit u/s 80c up to Rs 1.5 Lakhs in a financial year.

#4 – Yes Bank Tax Saver FD Scheme – 6.75 % interest rate

Here are the features of this Yes Bank Tax saver FD scheme.

Latest Post Office interest Rates – Jul, Aug and Sep 2020

Default tenure of this tax saver FD is 5 years.

For regular investors, this tax saver FD scheme offers 6.75% interest and 6.92% Yield. If you invest Rs 1.5 Lakhs in this FD scheme, the maturity amount would be Rs 201,900 in 5 years.

For Sr Citizens this tax saver FD scheme offers 7.5% interest and 7.71% Yield. If you invest Rs 1.5 Lakhs in this FD scheme, the maturity amount would be Rs 207,825 in 5 years.

No premature withdrawals allowed for this 5 year FD scheme.

One can opt for quarterly interest payout or quarterly interest compounding.

One can invest between Rs 10,000 to Rs 1.5 Lakhs in a financial year.

The bank would deduct necessary TDS. You can submit form-15G and 15H if applicable to avoid TDS.

One can claim income tax benefit u/s 80c up to Rs 1.5 Lakhs in a financial year.

#5 – RBL Bank Saving FD Scheme – 6.4% interest rate

Here are the features of this RBL Tax Saving FD scheme.

Default tenure of this tax saving FD is 5 years.

For regular investors, this tax saver FD scheme offers 6.4% interest and 6.56% Yield. If you invest Rs 1.5 Lakhs in this FD scheme, the maturity amount would be Rs 199,200 in 5 years.

For Sr Citizens this tax saver FD scheme offers 6.9% interest and 7.08% Yield. If you invest Rs 1.5 Lakhs in this FD scheme, the maturity amount would be Rs 203,100 in 5 years.

No premature withdrawals allowed for this 5 year FD scheme.

One can opt for monthly, quarterly, half yearly and yearly interest payout or quarterly interest compounding.

One can invest between Rs 100 to Rs 1.5 Lakhs in a financial year.

The bank would deduct necessary TDS. You can submit form-15G and 15H if applicable to avoid TDS.

One can claim income tax benefit u/s 80c up to Rs 1.5 Lakhs in a financial year.

Also Read: 20+ Ways to save income tax in 2020-21

Which tax saver fixed deposit to choose?

If you observe, we have not considered small finance banks as still many believe that investing in small finance bank tax saver FD schemes are risky though covered under deposit insurance.

We have also not considered NBFC tax saver fixed deposit as these are high risk and not insured by deposit insurance.

The list of banks provided by us are scheduled commercial banks excluding small finance banks / NBFCs and these are covered by deposit insurance. Hence, one can safely invest up to Rs 5 Lakhs in these tax saving fixed deposits that are offering highest interest rates.

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Suresh KP

3 comments

  • Jj Jj

    Ali highly informativne Articles..Thx Sureshji for this..

  • DR BISWAMBHAR Agarwal

    Both DCB and Yes bank has same rate of interest and same tenure and same 1.5 lac of investment, but effective yield is higher for DCB, how is it possible?

    • Hello Dr. Biwambhar, Why do you think I have introduced Yield column :-)? Yield is where the interest rates is compounded quarterly/yearly/halfyearly depending on how bank is compounding the rates. DCB yield is high, hence the maturity amount would be high compared to Yes Bank FD.

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