Invest in Tax saving fixed deposits (FD) schemes offering high interest
If you are planning to save tax by December, start saving money from this month itself. Tax Saving FD schemes offer attractive interest rates now which may continue for another couple of months. I have done a comprehensive list of Tax Saving Fixed deposit interest rates and you can choose the best one among the list. This post is based on request made by Prathap on "Suggest a topic".
Tax Saving FD schemes
If you want to save tax on your salary, you can invest up to ₹ 100,000 u/s 80C and get income tax exemption. Out of the all available tax saving schemes, Tax Saving FD schemes are favorite one for many of us.
Also read: How Salary individuals can save income tax u/s 80C and beyond?
High Interest: Out of all tax saving options available to you u/s 80C, Bank FD schemes offer fixed interest.
Principal is protected: If you consider ELSS tax saving scheme, there is risk of capital erosion, however investing in Bank tax saving FD, there is no such risk.
Tenure: Out of available secured tax saving options u/s 80C, tax saving bank FD’s are the only options available which are 5 years period paying high interest. Though PPF also offers high interest, the maturity of the PPF is 15 years. NSC tenure might be comparable, but interest rates are low.
Tax Saving FD interest rates as of 3-Oct-13
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Suresh
Invest in Tax saving fixed deposits (FD) schemes offering high interest
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Hi…
which is a good month to invest in a tax saving fixed deposit?
tax saving fixed deposits
tax saving fixed deposit
I have some doubts if possible please try to explain…
1. If i invest 100000 in SBI as FD for five years and i showed this as tax excemption. Is it possible for me to withdraw the FD after 1 or 2 months.
2. is it possible to invest more than 200000 as FD for tax excemption.
3. is it allowed for tax excemption if i invest more than one FD in one account.
Hi Ame, 1) You cannot withdraw tax saving FD before 5 years 2) Even if you invest Rs 2 Lakhs, you would get only Rs 1.5 laksh as tax exemption u/s 80C. 3) Yes, you can invest in multiple tax saving FD schemes, however maximum exemption comes to RS 1.5 Lakhs u/s 80c.
Sir,
I have a small doubt. My book states the following
If any amount including interest accrued is withdrawn by the assessee from his account before the expiry of 5 yrs ,the amount shall be deemed to be the income of the assessee in the year of withdrawal. However the following amounts shall not be included :
Interest already included in the total income of the assessee of the previous or years preceding such previous year.
Can you please explain what the last two lines mean?
Please clarify my doubt whether intt. Earned on bank fd tax saving scheme is taxable or not.thanks.
Interest earned on bank FD is taxable
I HAVE TAKEN SBI TAX SAVING FD FOR 1 LAKH IN 2012-13.CAN I SHOW THAT AMOUNT AGAINST 80C THIS FINACIAL YEAR 2014-15.
Sridevi, Any Tax sving FD scheme taken in financial year is to be shown only in that financial year under 80C deduction. You cannot show now.
Dear suresh I am an central gov employe coming under PB 3 structure, looking forward for investing money.Following are my exisisting priorities
a) education loan repayment 15000 pm
b) lic 14500 quaterly
Can spare around 10000 monthly for investments
Kindly advic were to start with investments for tax exemptions
a) MF
b)ETF gold Or any other domain.
Least appetite for risk.
Regards jashin
You can invest in any of the funds indicated in this article. https://myinvestmentideas.com/2013/11/top-5-tax-saving-mutual-funds-elss-in-india-to-invest-for-2014/
Hi suresh,
Thanks for the detailed info as always. I had a query. If i invest 50,000 per year for next 5 years in tax saver FDs, then my annualised interest(approx.) will be in the order 5,000(2014) , 10,000(2015) , 15,000(2016) , 20,000(2017) , 25,000(2018). How will TDS calculations be made?
Will it give any advanatge, if i open these Tax Saver FDs in different banks / branches?
Akshay, Your bank would provide interest paid and TDS deducted statement every year
Can I avoid tds by opening fds in different banks?
Can I file returns if tds is deducted and my income is not taxable?
No Akshay
Dear Suresh, Thanks for the detailed info about Tax Saver Fixed Deposit (FD). I have a question. Can we
invest in such a Tax Saver FD in the name of the spouse and still claim it under Sec 80c in our IT return? Like we can for Public Provident Fund (PPF)?
No Jayaraman. You should invest in your name to get 80c benefit
Hello Sir,
Thanks for the very good comparision about FD.
I am Salaried person. Yearly salary is 7 lakh and i have already taken Jeevan anand – yearly premium around Rs107000/-. Third premium i am going to pay now (Augest 2014). I heard that This LIC related tax saving schemes are not that much benificial compared to FD and Mutual Fund. In the recent Budget tax exemption gone upto 2.5 Lakh, so i have another 40 thousand to save. Now my question is
1) can i cancel my LIC jeevan anand and change it to FD or MF?
2) what is the expected Loss for me if i do that?
3) If i cancel and start FD or MF – suggest me the best options available.
Thank you so much in advance.
Selva, pls see my comments 1) Before cancelling, consider taking adequate term insurance 2) Your loss may be very less comparing to what you would be loosing in future 3) Invest in largecap or diversified funds like ICICI Pru focussed blue chip fund,HDFC Top-200, Birla SL Frontline fund, BNPP Equity fund, UTI Opps fund and Quantum long term equity fund. You can pick any of these funds.
Sir Thanks For Your Right Suggetion.
As you said I am planning to take SBI Term Insurance.
What about my cancellation? What is the ideal way to cancel LIC Jeevan Anand.
After 3 years – Close or leave it unpaid?
which one will give me very less loss?
Thanks for your reply
Selva, 1) First take SBI term insurance. 2) Approach LIC and ask for both these options i.e. exit or discontinue, but leave it unpaid 3) This would give you an idea whether to exit or not
Hello sir
i like to invest( canra bank) FD,3Lakh for one year / Tex Free or not
Mohammed, If you invest up to Rs 1 Lakh in such Canara Tax saver MF, you would get tax exemption u/s 80C. However returns from such ELSS would be taxed based on mutual funds taxation rules.
I am a NRI. I am looking for a steady income of 1lakhs per month. How much and where should I invest?
Hi Peter, In such case you can invest in NRE FD schemes. Majority of Indian banks are offering up to 9% tax free income. If you want Rs 1 L per month. You need Rs 1.35 Crores to invest in NRE FD Scheme to get Rs 1 Lakh steady income
dear sir
my monthly income is roughly 3.5 lacs. i already possess a immovable property in my name and i am dwelling in it. i woould like to know as to how do i invest in a safe and smart way. my income mostly consists of business income and tax is deducted at source.i have already invested one lakh limit in PPF for the year.i have also taken insurance policies in my name and in my spouse name. i also have a car insurance policy. i have two kids. first one is studying in upper primary . i want to know about child education plans and retirement plans in place for me.
Hi Hari, There are several ways you can plan for the points indicated by you. You have already exhausted Rs 1 Lakh in PPF. If you want safe tax free income, you should invest in Tax Free bonds like NHB (Subisidiary of RBI) which was offered 6 months back. You can refer this article for tax free investments. https://myinvestmentideas.com/2013/05/best-tax-free-investments-in-india/ I hope you would have taken adequate term insurance policies, if not, please plan this as first priority. Coming to child education plans and retirement plans, generally I do not believe in them. Why there should be seperate plan for them ? You can invest in several options like large cap mutual funds, balanced mutual funds, secured NCD’s, top rated company fixed deposits to get higher returns. Check various articles on our blog. Try to match with your risk appetite and start investing. Don’t overboard high risk options, but invest slowly from zero or low risk option to medium risk option and then try for a few high risk options too. This way you can balance and gain more.
Hi Suresh,
Need some clarifications on Tax Savings FD and Taxation. I apologize for a long list of queries, but i have these doubts for past few months, and due to some unavoidable circumstances, unable to get the clarifications with you in the past.
1. Is Investing on Fixed Deposit for 5 Years on any bank (even if the bank have no specific Tax Saver FD Schemes) eligible for Tax benefit under 80C?
2. If my PAN card is not mapped with my Savings Account / FD, if the Total Interest on the year is lesser than 10000, will TDS be recovered with 20% or only be recovered if the Total Interest goes beyond 10000?
3. If i Invest Tax Saver FD for 5 Years in my name, is it possible for my mother to get tax benefit for investing in my name (As Insurance Products offer tax deduction of investments under spouse and children)
4. I invested in 5 Years fixed deposit on Tamilnadu Power Finance Corporation. They have not mentioned that the Investment is under 80C. But, since it is a 5 years FD (Cumulative) will it be eligible for 80C?
5. In case if Power Finance has deducted tax at source (i recently submitted the 15G form for investment on april), will the tax credit be shown on Traces Form 12A or do i have to approach the Power Finance for Tax Credit Certificate?
6. Assume that my wife invested 4 lac on 1 year FD, and submitted the Form 15G. She is investing a short term deposit for some 50 days (2 Lac) without form 15 G, will the tax be deducted at source, for the 50 Days FD?
Regards,
Vignesh. S
No problem Vignesh 1) Any FD more than 5 years need not be tax saving FD. Tax saving FD has a lock-in period 2) TDS would be deducted 20% in excess of Rs 10,000 in SB account. 3) No, your mother cannot get benefit from your investment 4) Companies cannot issue tax saving FD schemes. It should be only banks and and Post office 5) Yes it would shw in TRACES 6) If you have given form 15G they would not deduct, else they would deduct at 20% without PAN and 10% if PAN details are given.
Hi,
I have done a simple FD of 20 k rs and have done post office rd of 30 k .
So can i show this for tax saving purpose.
and yes your data content is awesme and helping thousand of people for knowledge growth.
Reply fast if possible.
Regards
Praveen
Praveen, I think you are asking whether they are eligble u/s 80C or not. If you do bank FD of 5 years, it would be eligble. Also if you do Post office TD (not RD), you are eligble for exemption u/s 80C
Hi Suresh
I had personal meeting with manager of Dena bank and SBI and they said that for sure recurring deposit is not taxable. I am investing with RD and they have assured me that I won't be paying any taxes. He also mentioned some NRI non taxable schemes as well.
Hiren, Some banks are not deducting RD interest. But I felt it is out duty to declare in IT returns and pay tax.
Hi Suresh ji if possible provide the details of "sardar sarovar narmada nigam limited deep discount bond" which are issued in 1993 (I am having 2 bonds and there is information how to redeem or surrender etc..)
Hi Ravi, There is already process specified by SSNNL for deep discount bond. 1) Please check this document for redemption process http://www.sardarsarovardam.org/assets/SitepagesDocument/SPD__Userid2_20120229_151404.pdf 2) Please call this number and clarify your doubts before proceeding anything. +91 79 23252337
Suresh, this is quite informative on tax saving FD. I have some questions around it:
1 – is the interest earned be considered taxable, if it is more than 10K?
2. – since it is 5 year deposit scheme, can one invest on a yearly basis and compond the returns? OR is it one time?
Hi Jitin, 1) Interest earned is taxable. You need to add this under “Income from other sources”. Since this is not SB account interest, any interest is taxable irrespective whether it is more than 10K or less than 10K 2) This is one time investment to get tax exemption for that year. The returns would be cumulated and paid after 5 years at maturity.
Hi Suresh
I would like to mention here that all recurring deposists in india are tax free (Irrespective of amount invested monthly)
Cheers
Hiren
No Hiren, Except SB account interest up to Rs 10,000 all FD or recurring deposit interest are taxable. I personally analysed several websites and contacted auditors to get true picture. If you can provide references, I can analyse more.
I am retired employee from Ministry in Govt of India in Feb 2013. I would like to know, as is similar other retirees, the avenues for investment for aged 60 and beyond. Please also advise on tax aspects for retirees and investments required for tax free income during sunset years.
Hi VK garu, Sure, I have posted this under suggest a topic and would analyse and come back in coming weeks.
One of the main things to note is that the interest paid on these Tax saving FDs is clubbed with your annual income and taxed at the applicable tax slab. Thus, people in the 20% and 30% bracket will end up paying this amount of tax on the interest received on the FDs, even if it is cumulative. So the annualized yield, post-tax, will actually be in the 6-7% range only (30% on 9% will be approx. 6.3%). This fact should be borne in mind whilee going for these instruments.
For people in the 10% bracket, I think these will be good options comparable to the PPF, post-tax.
Dinesh, Agree with you. But if you are not doing tax saving, you are paying tax. If you are investing in such tax saving options, you would save tax + get 7% tax free returns. Means your net income on these transactions is high comparing to “Not doing anything”. I agree that these are good for low tax bracket individuals.