Tax saving Fixed Deposits (FDs) remains a popular choice for risk-averse investors, especially among senior citizens. These investment instruments not only provide assured returns but also offer tax benefits under Section 80C of the Income Tax Act, allowing investors to claim deductions of up to Rs 1.5 lakh. These FDs come with a mandatory 5-year lock-in period, ensuring a disciplined approach to saving. With several banks offering competitive rates on tax-saving FDs, it’s important to know where you can get the best returns. Here’s a look at which banks are currently offering the highest interest rates on tax-saving FDs.
Small Finance Banks Leading with High FD Rates
If you are looking for the best returns, small finance banks are a great place to start. They are currently offering some of the highest interest rates on tax-saving FDs, making them an attractive option for investors who want better returns.
- Suryoday Small Finance Bank tops the list with an attractive interest rate of 8.75%, making it the best choice for tax-saving FD investors.
- Unity Small Finance Bank isn’t far behind, offering an interest rate of 8.65%.
- Utkarsh Small Finance Bank also provides a competitive rate of 8.35%, while AU Small Finance Bank, Jana Small Finance Bank, and Equitas Small Finance Bank offer a rate of 7.75%.
Private Sector Banks Offering Competitive Rates
Many private sector banks also provide competitive interest rates on tax-saving FDs. These banks are ideal for those who prefer investing with larger institutions while still securing decent returns.
- DCB Bank leads the private sector with a rate of 7.90%.
- Yes Bank offers a solid 8.00%, providing an attractive option for risk-averse investors.
- IndusInd Bank, Axis Bank, and HDFC Bank are all offering rates in the range of 7.50% to 7.75%, making them strong contenders.
Public Sector Banks: A Safe Haven for Conservative Investors
Public sector banks remain a trusted choice for many conservative investors, and while their rates may not always match smaller finance institutions, they still offer solid returns coupled with safety and reliability.
- State Bank of India (SBI) offers one of the best rates in this category, with 7.50% for tax-saving FDs.
- Canara Bank follows with a rate of 7.20%, while Bank of Baroda offers 7.15%.
- Several others, including Union Bank of India, Indian Overseas Bank, and Punjab National Bank, offer competitive rates of around 7.00%.
Foreign Banks in the Race
Foreign banks in India also offer tax-saving FDs, albeit with lower rates compared to small finance or private sector banks.
- Deutsche Bank provides an interest rate of 7.50%, which is competitive with top Indian banks.
- Standard Chartered Bank offers 7.25%, making it a safe option for those looking to invest in foreign bank FDs.
Choosing the Right Bank for Your Tax-Saving FD
When it comes to investing in tax-saving FDs, it’s important to compare the interest rates offered by different banks and choose the one that best aligns with your financial goals. Small finance banks currently lead the market with the highest returns, but larger public and private sector banks offer a balance of reliability and competitive rates. Always ensure that the bank you choose fits your risk profile and long-term investment strategy.
