Fixed Deposit Plans: Here's Best Tax-Saving FDs that offer High Interest Rates

Are you thinking of investing some money amid Coronavirus but worried of safe returns, then we are bringing you the solution here.

The bank fixed deposit (FD) has been the most preferred investment option in India. Investors of all age groups love to invest their savings in this investment avenue on FDS which claims the safest return. Moreover, investments up to Rs 1.5 lakh can be claimed for deduction under section 80C of the income tax act

Why FD's are most preferable?

Certain conservative investors prefer tax-saving FDs for taking the section 80C deduction benefit. Investments up to Rs 1.5 lakh can be claimed for deduction under section 80C of the income tax act. Tax saving FDs have a lock-in period of five years and premature withdrawals are not allowed.

In these uncertain COVID-19 times, investors are moving away from riskier assets to safer options such as FDs to preserve their capital, despite the steady decline in interest rates over the last one year.

It must be noted that there are separate Fixed deposit plans for senior citizens of the country.

Which Bank offers high Interest Rates?

You will be surprised to know that 10 private banks are offering tax-saving FDs with rates of 6 per cent or more. AU Small Finance Bank is in the top of the chart with 7 per cent interest, followed by private banks such as DCB Bank, IDFC First Bank, IndusInd Bank, Yes Bank and RBL Bank, according to data researched by Bank Bazar.

After allocating to small-savings and other tax saving avenues, investors can park any surplus available in such FDs.

FDs: Know Interest Rates of Different Banks

Axis Bank, ICICI Bank : 5.5 per cent

HDFC Bank : 5.35 per cent on five-year fixed deposits.

State Bank of India (SBI) and Bank of Baroda (BOB) pay 5.40 per cent and 5.30 per cent, respectively.

A sum of Rs 1.5 lakh invested in AU Small Finance Bank’s tax-saving FD grows to Rs 2.12 lakh after five years.