Archive · 19 Jul 2026
Tax-Saving FDs: Top Banks Offer High Interest
Tax-saving fixed deposits (FDs) are a popular investment option for people who want to save on taxes and get steady returns.
These FDs offer interest rates ranging from 5% to 8.60% for general citizens and up to 9.10% for senior citizens from select small finance banks.
The money you invest can reduce your taxes by up to ₹1.5 lakh under Section 80C of the Income Tax Act.
However, you have to keep the money invested for five years and cannot withdraw it early.
The interest you earn is taxable.
Different banks offer different interest rates, so it's important to compare them before investing.
Small finance banks like Suryoday and Jana offer some of the highest rates.
Private and public sector banks also offer tax-saving FDs but at slightly lower rates.
Before investing, consider your financial goals, liquidity needs, and whether you prefer guaranteed returns or higher growth potential from market-linked options.
Tax-saving FDs offer interest rates from 5% to 8.60% for general citizens and up to 9.10% for senior citizens.
These FDs have a mandatory five-year lock-in period with no premature withdrawals allowed.
Investments qualify for a tax deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act.
Interest earned is fully taxable according to the investor's income tax slab.
Top rates are offered by small finance banks like Suryoday, Jana, and North East Small Finance Bank.
- Who
- Resident individuals, senior citizens, NRIs, HUFs
- What
- Tax-saving fixed deposits (FDs) with guaranteed returns and tax benefits
- When
- Available for a five-year lock-in period
- Where
- Offered by various banks including small finance banks, private, and public sector banks
- Why
- To reduce tax liability while earning guaranteed returns
Tax-Saving FDs
Market-Linked Options
Investment Type
Tax-Saving FDs
Tax-saving FDs offer fixed, guaranteed returns with a five-year lock-in period.
Market-Linked Options
Market-linked options like ELSS provide potential for higher long-term growth but come with market risks.
Tax Benefits
Tax-Saving FDs
Tax-saving FDs qualify for a deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act.
Market-Linked Options
Market-linked options like ELSS also offer tax benefits under Section 80C but with higher growth potential.
Risk and Returns
Tax-Saving FDs
Tax-saving FDs offer predictable returns unaffected by market volatility.
Market-Linked Options
Market-linked options offer higher potential returns but are subject to market risks.
- Interest Rates (General Citizens)
- 5% to 8.60%
- Interest Rates (Senior Citizens)
- Up to 9.10%
- Lock-in Period
- 5 years
- Tax Deduction
- Up to ₹1.5 lakh under Section 80C
- Eligibility
- Resident individuals, senior citizens, NRIs, HUFs
- TDS
- Deducted if applicable threshold is crossed