Fixed deposits or FDs, the fixed income instruments which are highly popular among customers, are of two types: regular FDs with the facility of premature withdrawal and tax-saving FDs which do not have the facility of premature withdrawal. Fixed deposits with premature withdrawal facility, however, do not offer income tax benefits. Tax-saving fixed deposits help you save on income tax outgo. However, tax-saving fixed deposits come with a lock-in period of five or 10 years. The deadline for filing income tax returns (ITR) for assessment year 2018-19 is round the corner (July 31).
If you did not make any tax-saving investments in the last fiscal, you should make some wise choices this year to invest your money in tax-saving schemes like fixed deposits for tenures of five or 10 years. These fixed deposits also offer attractive interest rates.
Consider this: a five-year tax-saving fixed deposit in State Bank of India (SBI) fetches you an interest rate of 6.75 per cent. As compared to this, a five-year fixed deposit with ICICI Bank offers an interest rate of 7 per cent.
Given below are fixed deposit interest rates of 10 major banks including SBI, HDFC Bank and ICICI Bank:
(All figures in per cent)
| Banks | 5-year | 10-year |
|---|---|---|
| SBI | 6.75 | 6.75 |
| HDFC Bank | 6 | 6 |
| ICICI Bank | 7 | 7 |
| PNB | 6.25 | 6.25 |
| Axis Bank | 7% | 7% |
| Kotak Mahindra Bank | 6.5 | 6.5 |
| YES Bank | 7.1 | 7.1 |
| Bank of Baroda | 6.7 | 6.6 |
| IDBI Bank | 6.75 | 6 |
| RBL Bank | 7.25 | 7.25 |
(Fixed deposit interest rates mentioned above are for deposits below Rs 1 crore as mentioned on the banks' websites.)
Fixed deposits per se are a popular savings instrument. A fixed deposit can be created easily even online. Most banks offer this facility.
Post offices also offer the facility of a fixed deposit account.
Small Finance banks like AU Small Finance Bank and Suryoday Bank also offer fixed deposit accounts.
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