Top 10 Best Tax Saving Fixed Deposit Schemes in 2019 in India

Top 10 Best Tax Saving Fixed Deposit Schemes in 2019 in India

Bank Fixed Deposits are conventional method of investing in India. While Bank FDs and Post Office FDs provide fixed rate of interest, these are good for low risk investors. If you are an employee or business person and are low risk taker and willing to do some tax savings, you can invest in some of the good tax saving fixed deposit schemes in India in 2019. Tax Saving Fixed Deposit can provide 7% to 8% annualized returns. Which are the Top Tax Saving Fixed Deposit Schemes in India now in 2019? Which are the Best Tax Saving FDs that provide higher returns of invested in 2019?

Also Read: Top Rated Mutual Fund Schemes from Value Research – Should you invest?

What is a Tax Saving Fixed Deposit?

If you are already aware, you can skip this section.

Tax Saving Fixed Deposit is the special category of fixed deposit where the depositor gets the benefit of a tax break when they invest in it. A maximum benefit of Rs. 1,50,000 can be availed u/s 80C of the Income Tax Act. It comes with a lock-in period of 5 years. It is available at all public and private sector banks and offers greater interest than a saving account. The long-term FDs attract even better interest rates.

Features of Tax Saving FDs in India

Here are some key features of Tax Saving Fixed Deposit Schemes.

1) The interest earned on such FD is payable either on a monthly or quarterly basis which is either paid out (non-cumulative) or reinvested (cumulative) as per the chosen plan.

2) Only individuals who are citizens of India and members of HUF (Hindu Undivided Family) and NRIs can invest in fixed deposit scheme.

3 A person can invest in these FDs through any public or private sector bank except for co-operative or rural banks.

4) Investment in Post Office Time Deposit of 5 years is also eligible for deduction u/s 80C of the IT Act, 1961. To add more, Post Office FDs are transferable from one post office to another. 

5) The minimum amount to be invested varies from bank to bank, but the maximum amount to be invested in it is Rs. 1,50,000 per annum.

Benefits of Tax Saving Fixed Deposits

There are many benefits that can be availed by the investor by investing in FD. The following are a few of them-

One can open the FD through net banking also. If the KYC formalities have been done at the bank, the investor need not go to a bank for investing through FD. 

Taxes saving FDs are mostly available for a tenure of 5 to 10 years.

Most banks offer a of 0.5% higher interest rates for senior citizens.

If the tenure is over 5 years, premature withdrawal is allowed after the completion of the 5-year lock-in period.

On maturity, the maturity amount of FD is credited directly to the bank account.

The investor can avail the exemption a tax deduction for investments in tax saving FDs of up to Rs. 1.5 lakh u/s 80C of the Income Tax Act, 1961.

The tax saver FDs can be opened both singly and jointly. In case of joint account, the tax benefit will be availed only by the first holder of the deposit. 

Negative points in Tax Saving Fixed Deposits

Every investment has its own pros and cons. The same thing applies to FDs too.

1) The FD comes with a minimum lock-in period of 5 years. Your funds are locked for a period of 5 years and cannot be made available in any condition.

2) Premature withdrawal and loan against FD are not permitted.

3) It offers less return as compared to ELSS funds.

4) You can seek an exemption for TDS only if the net interest income is below Rs. 10,000.

5) The interest earned is taxable as per the investor’s tax bracket.

Who can invest in Tax Saving Fixed Deposit Schemes?

If you cannot take risk and believe in investing for tax savings of 5 years only, you can opt for tax saving fixed deposit schemes.

Top 10 Best Tax Saving Fixed Deposit Schemes in India for 2019

The following are the best tax saving options in FD for the new financial year 2019-2020.

Top#1 – Deutche Bank Tax Saving FD Scheme

It offers the highest rates in regular FDs as of now at the rate of 8.25% p.a.

It does NOT offer an additional 0.5% to senior citizens. 

A minimum of Rs. 20,000 is required for investing in this FD. The deposits are accepted in multiples of Rs. 1000 only.

It does not allow for premature closure.

Top#2 – Lakshmi Vilas Bank Tax Saver Deposit

The interest offered is 7.85% p.a. and an additional of 0.6% for senior citizens.

It requires an investor to invest a minimum of Rs. 1,000 and multiples thereof.

The minimum tenure is 5 years.

Top#3 – Post Office 5 years FD – Tax Saver Deposit

Post Office Tax Saver Deposit (5 years) interest is 7.8%.

One can invest Rs 200 minimum and no maximum limit.

The lock in period is 5 years.

Top#4 – AU Small Finance Bank Tax Saving Fixed Deposit

It offers as high as 7.77% p.a. and for senior citizens even more at 8.27% p.a.

With a minimum deposit of Rs. 1000 for a tenure of 5 years, this bank offers some lucrative interest rates.

Top#5 – IDFC Bank Tax Saving Fixed Deposit

IDFC Bank offers the highest rates in regular FDs as of now at the rate of 7.75% p.a.

For senior citizens, it even offers an additional 0.5% to provide as high as 8.25% p.a. This is the best rate in this investment segment.

The minimum amount required for opening an FD is Rs. 10,000.

The FD can be withdrawn partially after 5 years without attracting any premature penalty.

Top#6 – Lakshmi Vilas Bank Tax Saving FD

It offers an interest rate of 7.75% p.a.

For senior citizens, this rate is 8.35% p.a.

The minimum amount of deposit is as low as Rs. 100.

The maximum FD tenure available is 5 years. 

Top#7 – DCB Bank Tax Saving FD Scheme

It offers an interest rate of 7.75% p.a. for regular investors and 8.25% p.a. for senior citizens.

One can initiate an FD with a minimum amount of Rs. 10,000 and default tenure of 5 years. You can opt for 5 to 10 years FD too.

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

Top#8 – RBL Bank Ltd or Ratnakar Bank Limited Tax Saver FD Scheme

It offers a 7.60% interest rate p.a. while for senior citizens this rate is 8.10%.

The minimum amount to be invested is Rs. 100 and can be invested in the multiples of 100.

The FD tenure is a minimum of 5 years and a maximum of 10 years.

You may like: Latest Post Office Interest Rates 2019

Top#9 – HDFC Bank Tax Saving Fixed Deposit Scheme

It offers a 7.25% interest rate p.a. and senior citizen rate at 7.75% p.a. The interest is calculated on a quarterly basis .

The minimum amount to be invested is Rs.100 and invested in the multiples of 100.

If the FD rate is requested on a monthly basis, it will be available at a discounted rate over standard FD rates.      

Top#10 – ICICI Bank Tax Saving Fixed Deposit

It offers an interest rate of 7.25% p.a. and 7.75% p.a. for senior citizens.

It offers a traditional plan that pays interest on a monthly, or quarterly basis or a reinvestment plan that reinvests the interest amount along with principle.

A minimum of Rs. 10,000 is needed to open an FD for a tenure of 5 years.

Please note that these interest rates are subject to change at the discretion of the bank.

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Suresh KP

Top 10 Best Tax Saving Fixed Deposit Schemes in India 2019

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