Banks with highest Interest FDs | Fusion - WeRIndia

Under Section 80C of the Income Tax Act, tax-saving Fixed Deposits (or FDs) can allow a person to reduce his or her tax liability by claiming the investment amount as a deduction.

If an investor invests in tax-saving FDs with a lock-in period of 5 years, then that investor can claim a maximum deduction of ₹150,000. It is important to remember the 5-year lock-in period of these tax-saving FDs, which makes it so that there can be no withdrawals within the first 5 years.

At the moment, banks are offering interest rates from 6% to 7.65% on tax-saving FD schemes. Therefore, in order to get the best interest rates on these schemes, these are seven banks that are offering the highest interest rate on these tax-saving FDs.

The Bharat Cooperative Tax Benefit Scheme of the Bharat Cooperative Bank offers an interest rate of 7.75% to the general public. Senior citizens can get a rate of 7.9% on a deposit amount up to ₹1 lakh.

The RBL Bank offers an interest rate of 7.2% on its tax-saving FDs, which have a tenure of 5 years. However, like most other banks, the RBL Bank has cut the interest rates on its deposits.

The Abhyudaya Tax Saving Scheme (or ATSS) of the Abhyudaya Cooperative Bank offers an interest rate of 7% per year, with a lock-in period of 5 years. Since it may not have branches in all Indian cities, investors should check for the online option before investing.

The Development Credit Bank (or DCB), based in Mumbai, offers an interest rate of 7.25% on its tax-saving FDs, while senior citizens can get an interest rate of 7.75% per year. The DCB also offers a facility of quarterly compounding or quarterly interest payment option.

The IDFC (Infrastructure Development Finance Company) Bank offers an interest rate of 7.2% on its tax-saving FDs for any deposit less than ₹1 crore. This is about the same amount as the interest rates offered by cooperative banks, but it is much higher than the rates offered by some private or government-owned banks.

The Yes Bank offers an interest rate of 6.92% on its tax-free FDs, and senior citizens can get an additional interest rate of 0.5%.

However, when getting benefits from Section 80C of the Income Tax Act, the interest rates of these deposits are not tax-free in the hands of the investors.

The City Union Bank, based in Tamil Nadu, offers an interest rate of 6.7% on its tax-saving FDs for any deposit amount up to ₹1 lakh.

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