Highest Tax Saver Fixed Deposit Interest Rates
Highest Tax Saver Fixed Deposit Rate is given by IDFC Bank at 8.25%
Best Interest Rate for 5 Years and Above
|AU Small Finance Bank||7.25%|
|Bank of Baroda||6.70%|
|Bank of India||6.50%|
|Bank of Maharashtra||6.50%|
|Capital Small Finance Bank||7.50%|
|Catholic Syrian Bank||6.50%|
|Central Bank of India||6.50%|
|City Union Bank||6.70%|
|Equitas Small Finance Bank||7.00%|
|ESAF Small Finance Bank||7.00%|
|Fincare Small Finance Bank||7.00%|
|J & K Bank||6.50%|
|Karur Vysya Bank||7.00%|
|Kotak Mahindra Bank||6.50%|
|Lakshmi Vilas Bank||7.75%|
|Punjab & Sind Bank||6.55%|
|Punjab National Bank||6.25%|
|South Indian Bank||6.50%|
|Suryoday Small Finance Bank||8.25%|
|Ujjivan Small Finance Bank||6.50%|
|Union Bank of India||6.85%|
|United Bank Of India||6.00%|
|Utkarsh Small Finance Bank||7.00%|
Check out - Top 15 Ways to Save Tax
Compare Tax Saving Schemes and Options in India
Information on Tax Saving Schemes/Options/Plans
|Tax Saving Schemes||Risk||Return||Lock in Period||Tax Benefit|
|ELSS (Equity Linked Tax Savings Scheme)||High||High (Market & Fund Based Around 18% in last three years)||3 years||Interest is Tax free|
|PPF (Public Provident Fund)||Risk Free||Medium (Around 8.5 % in last 3 years)||15 years||Interest is Tax free|
|Tax Saver Fixed Deposits||Risk Free||Medium (Around 8.00 %)||Min. 5 years||Interest is taxable|
|NSC (National Savings Certificate)||Risk Free||Medium (Around 8.00%)||5 or 10 years||Interest is taxable|
|Life Insurance||NA||Low||10 to 20 years||No Tax|
|NPS (New Pension Scheme) Tier I||Medium||Medium (Market based and around 9.50% in last 3 years )||Varies but best to withdraw after 60 year of age||Income Taxable|
|SCSS (Senior Citizen Savings Scheme) (only for people equal to above 60 years age or people retired under superannuation or VRS with age 55 and above)||Low||Medium (around 9%)||5 years||Interest Taxable|
|EPF (Employee Provident Fund)||Low||Varies (Around 8.50%)||5 years||Not taxable|
|Tuition Fee for Children||NA||NA||NA||NA|
|Home Loan Principal Repayment||NA||NA||NA||NA|
|Rajiv Gandhi Equity Savings Scheme|
Medium to High
|Market Based||1 year||Not taxable|
|ULIP (Unit Linked Insurance Plan)||High||Medium to High (Market based and around 9.8 % in last 3 years)||5 years||Not taxable|
|Sukanya Samridhi Yojana||Low||Medium (around 9 %)||Till girl child attains 18 years of age||Not taxable|
ELSS- Equity Linked Savings Scheme - under 80C
ELSS or Equity Linked Saving Schemes are mutual funds which normally invest in equities. so they can give good returns over the short period 3-5 years. This return is, however, not guaranteed like all other mutual funds.
ELSS funds have a lock in period of only 3 years . The return from ELSS funds is also tax free.
You can invest up to Rs 150,000 in ELSS funds either as a lump sum or on a monthly basis (SIP). One point to note here would be that in case of SIP each installment will have a lock in period of three years.
PPF- Public Provident Fund - under 80C
PPF is a good option to invest if you are looking for surety in your returns.
PPF interest rates are announced every year. PPF returns are not high, it basically saves your money from inflation as its rate is at par with inflation rate. It is tax free and you can do a lump sum or regular investments.
The duration of a PPF account is 15 years which is extendable by 5 years at a time. You cannot withdraw money from your PPF account except under certain conditions but not before 5 years. You can invest in PPF through a bank or Post Office.
Tax Saver Fixed Deposits - under 80C
Tax saver Fd's are risk free investment with an average return of 8-8.50% but there is a lock in period of 5 years, so they do not offer liquidity option.
The maximum amount you can invest is Rs 1,50,000 and the interest earned on the same is fully taxable which is deducted every time you earn interest. TDS collected by banks is normally 10% of the interest earned.
After deducting tax, 5 year bank FDs are not particularly attractive- especially for people in the 20 and 30% tax brackets since the post-tax returns are typically lower than other tax saving investment options.
NSC-National Savings Certificate under 80C
NSC are tax saving products offered by Indian Post. The rates are fixed by government and they change frequently. The current rate is 8.5% for 5 year lock-in NSCs, and 8.8% for 10 year lock-in NSCs.
The interest earned every year is fully taxable but the same is not paid to the investor yearly. Instead, interest is re-invested every year and the whole amount will be received on maturity after deducting eligible tax. Maximum amount that can be invested is Rs.150,000.
Life and Medical Insurance Schemes-Life Insurance under 80C and Medical Insurance under 80D
This is a traditional way of saving tax vis-a-vis benefit of life cover.
There are basically 2 kinds of Life Insurance Policies:
>Pure risk also called term life which is even though not an investment but everyone should have it to ensure a risk cover to your life. The premium is usually nominal, in fact you can have a term cover of Rs.1 Cr in just Rs.10,000 yearly. The premium you pay every year gives you tax benefit. But this type of policy does not offer any type of return or profit.
>Risk cum investment policy which pay you back your money over time with a little return or appreciation around 5-6% which is also not certain.
Medical insurance schemes are again a necessity for you and the premium you pay every year provides you tax benefit under section 80D upto Rs. 15,000 for medical insurance of self, spouse and dependent children and Rs. 20,000 for medical insurance of parents above 65 years.
NPS (National Pension Scheme) Tier 1 under 80C
National Pension Scheme is a almost like investing in mutual funds with its Safe, moderate and Risky options. The returns are, however, not guaranteed. Maximum amount that can be invested is Rs.2,00,000/- per year and the amount can be withdrawn as per details given below. The withdrawals from the scheme are also taxable. You can chose on which type of funds you want to invest with. The benefit of the scheme is the monthly pension it gives you after retirement
Before 60 years- Only 20% of the accumulated corpus can be withdrawn as lump sum, rest 80% has to be annuitized / purchasing an annuity from any IRDA-regulated life insurance company
Between 60 to 70 years- Can withdraw up to 60%, rest 40% has to be annuitized
Upon demise -Any amount lying to the credit at the age of 70 should be compulsorily withdrawn in lump sum
In case of demise of the subscriber, the nominee can withdraw 100% of the corpus
SCSS (Senior Citizen Savings Scheme) under section 80C
The senior citizens savings scheme is a product available for senior citizens to save tax. It can only be opened by people who are equal to or above 60 years old or people who have attained superannuation or have taken voluntary retirement at age of 55 years.
Maximum amount that can be invested is 15 lakhs and there is a lock-in period of 5 years. You can extend your investment for another 3 years. The interest is paid quarterly. However, the benefit is that premature withdrawal is allowed subject to penalty as follows:
More than 1 year but less than 2 years – 1.5% of deposit amount
More than 2 year but before maturity – 1 % of deposit amount
EPF (Employee Provident Fund) under section 80C
If you are a salaried person, then investing in this scheme is not optional for you and it depends in your company policy. The amount deducted under this scheme is subject to tax exemption under 80C.
EPF is deducted directly from your salary every month and it includes 10% or 12% of your Basic salary.
You can withdraw EPF when you change jobs. However, your accrued amount will be taxed as other income. If you withdraw EPF after 5 years, you do not attract any tax.
The interest rate varies every year and for 2014-15, the interest rate is fixed at 8.75%
Tuition Fee for Children under section 80C
Tuition fee paid by you for your child gives you tax benefit upto a maximum of 2 child.
Home Loan Principal Repaymet - under section 80C
The Equated Monthly Installment (EMI) that you pay every month to repay your home loan consists of two components – Principal and Interest.
The principal component of the EMI qualifies for deduction under Sec 80C.
The principal component of your loan, is included under Section 80C, offering a maximum deduction up to Rs. 1,50,000. A tax deduction of Rs 2 lakh per year is allowed against payment of interest on home loans, if the house is acquired within three years of taking the loan. This amount is deducted from your total income while arriving for your net taxable income. In case the possession of house happens after three years, the permissible deduction falls to just Rs 30,000 a year — a reduction of 85%.
Home loan principal and interest
Tax deduction is available for both the principal repayment as well as interest payment on your home loan.
Principal portion – Deduction is available up to Rs.1.50 lacs under section 80C.
Interest portion – Deduction is available up to Rs. 2 lacs under section 24 and additional deduction of Rs. 50,000 is available under section 80EE from 2016 onwards.
Stamp duty & registration charges – These can also be claimed for tax exemption under section 80C subject to a maximum deduction available under 80C being Rs.1.50 lacs. For claiming this exemption, house should be new residential unit and in name of assessee. The deduction is available only for the year in which the duty and charges have been paid.
Principal deduction of Rs.1.50 lacs is available for house registered in name of assessee for a vacant or self occupied house. The deduction is available only after completion of house of possession of house.
Deduction can be claimed by co-borrowers also for e.g. if property and loan is in name two borrowers both are eligible to claim 50 % of principal repayment amount.
Any person who sells the property within 5 years from date of purchase has to pay the amount of tax exemption claimed within these years.
Deduction up to Rs. 2 lacs can be claimed under section 24 for the amount of interest paid on your housing loan principal repayment. In budget 2016, additional Rs.50,000 deduction is also available for first time home owners.
Section 24 basically covers “Loss/Gain from Housing property” under which rent is gain on property and interest paid is loss. Hence, if rent received is more than interest paid the difference amount will be included in your total income for the respective financial year. On the other hand, if interest paid is more than rent received, you can claim deduction for the difference amount.
If property is not rented at all, you can simply claim the entire interest portion up to Rs.2 lacs and Rs.2.50 lacs (in case of first time owners).
Rajiv Gandhi Equity Savings Scheme- under section 80CCG
Under this, first-time equity investors can invest up to Rs 50,000 in approved stocks and mutual funds and claim tax deduction on 50% of the amount, or Rs 25,000, under Section 80 CCG of the Income Tax Act. But to claim this exemption, your income should not be more than Rs 12 lakh a year and you should also have a demat account. The tax benefit under the scheme can be claimed for three years.
ULIP (Unit Linked Insurance Plan)- under section 80C
Premium paid for a ULIP is eligible for tax deduction under section 80C.
For ULIPs purchased after 1st April 2012 - The deduction under section 80C can be availed when the premium is less than 10% of the sum assured. If the premium is more than 10% of the sum assured the tax deduction is allowed on the amount equal to 10% of the sum assured.
For ULIPs purchased before 1st April 2012 - The deduction under section 80C can be availed when the premium is less than 20% of the sum assured.If the premium is more than 20% of the sum assured the tax deduction is allowed on the amount equal to 20% of the sum assured.
Amount on which deduction can be claimed – The entire amount paid by you as premium to keep the policy running can be claimed as a deduction.
ULIP must be kept in force for 5 years to claim deduction – The premiums must be paid regularly and the ULIP must be continued to avail tax benefits. In case you discontinue your ULIP before 5 years, you will not be allowed any tax benefits. Any deduction allowed in the previous years shall get added back to your income in the year in which ULIP is closed.
Sukanya Samridhi Yojana
The scheme can be opted by parents who have girl child below the age of 10. If you have a daughter and she is less than 10 years old, the Sukanya Samriddhi Scheme is a better option than the bank deposits, child plans and even the PPF account.
Accounts can be opened in any post office or designated branches of PSU banks with a minimum investment of Rs 1,000. The maximum investment in a financial year is Rs 1.5 lakh and deposits can be made for a maximum of 14 years after opening the account. A parent can open an account for a maximum of two daughters and 50% amount can be withdrawn when you daughter attains 18 years of age.
If, however, your daughter gets married before attaining 18 years of age, the scheme by default is discontinued and the entire amount will be paid subject to procedures as prescribed by government.