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Tax-saving fixed deposits are one of the most popular options among conservative investors who want to reduce their tax burden. The reasons are that, similar to what their name implies, tax-saving fixed deposits are subject to a 5-year lock-in requirement and only enable tax deductions of up to ₹1.5 lakh every fiscal year under Section 80C. Tax-saving FDs can be opened with monthly and quarterly payouts, and interest rates vary depending on who is applying, from the general public to senior citizens. Individuals can look at the five public sector banks listed below, which, according to our own research, give the highest interest rates on tax-saving FDs in the market, amid the rising interest rates on bank fixed deposits.
Union Bank of India
First on our list is Union Bank of India, which has changed the interest rates on its fixed deposits (FDs) effective November 25, 2022. The bank currently offers a 6.70% interest rate on tax-saving fixed deposits with a 5-year term, and elderly persons are eligible for an extra 50 basis points of interest, bringing the total interest rate to 7.20%.
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Canara Bank
Canara Bank, which is ranked second on our list in terms of higher rates, revised its interest rates on October 31, 2022. Canara Bank is now giving a regular rate of 6.50% and 7.00% for elderly persons on tax-saving fixed deposits of 5 years. “Bank Offers 6.50 % p.a. for Canara Tax Saver Deposit scheme (General Public). Maximum deposit acceptable is ₹1.50 Lakh,” Canara Bank has mentioned on its website.
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Indian Overseas Bank
Indian Overseas Bank is the third bank in terms of better interest rates on tax-saving FDs. The interest rates on the bank’s term deposits are effective as of 10.11.2022. IOB Tax Saver Deposit interest rates are 6.40% for the general public, 6.90% for senior citizens, and 7.15% for super senior citizens.
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Indian Bank
Indian Bank is the fourth bank on our list in terms of higher tax-saving FD rates. Interest rates on domestic retail term deposits are effective from October 29, 2022. On tax saving FDs of 5 years, the bank is offering an interest rate of 6.40% and 6.90% for senior citizens.
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Bank of India
The fifth bank in terms of higher interest rates on tax-saving FDs is Bank of India. The bank’s term deposit interest rates are effective as of 1.11.2022. The bank is giving an interest rate of 6.25% on 5-year tax-saving FDs. Bank of India has mentioned on its website that “Additional premium of 25 bps, over & above the existing 50 bps will be paid to Senior Citizen’s on their retail TD (Less than Rs. 2 Cr) for all the tenors of 3 Years & above i.e. 75bps.”
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