In the last month of the financial year, this is the time when a salaried person Tax Finds a way to invest for tax savings. But the investment option should be decided based on its financial goals. However, it is not too late for this. Taxpayers have some options in the last month, with the help of which they can invest tax savings. There are fluctuations in the equity market. Lumpsum’s investment in equity linked savings schemes (ELSS) can be risky. In such a situation, investing in a fixed deposit for 5 years seems to be the best option. Most investors also prefer fixed deposits because the returns are fixed. This is the reason why people in the lower tax bracket prefer to invest in FDs.
Investing in a fixed deposit provides tax relief under Section 80C of the Income Tax Act. Tax exemption can be claimed on investments up to Rs 1.5 lakh under 80C. The lock-in period of tax saving FD is 5 years and premature withdrawal is not allowed. Even banks in the past InterestEven if the rate is reduced, there are still some banks that are offering attractive interest rates on FDs.
Smaller private banks are offering higher interest rates
Smaller private banks are offering interest rates of up to 6.75 per cent on tax saving FDs. These interest rates are much higher than large public banks. DCB Bank and Yes Bank are at the top with an interest rate of 6.75 per cent. IndusInd Bank is in third place with a rate of 6.50 per cent.
A.U. Small Finance Bank and Ujjivan Small Finance Bank are offering tax saving FDs at 6.50 per cent and 5.80 per cent, respectively. Small finance banks are offering FDs at higher interest rates than many large private banks. Foreign banks like DBS Bank and Doshe Bank are also paying interest of up to 5.50 per cent on tax saving FDs. Axis Bank, ICICI Bank and HDFC Bank are also offering interest rates on tax saving FDs at 5.50%, 5.35% and 5.30% respectively.
If you look at government banks, Union Bank of India is offering the highest interest rate on tax saving FDs for 5 years. The bank pays interest at 5.55 per cent. This is followed by Canara Bank and State Bank of India, which offer interest rates of 50.50 and 5.40 per cent, respectively. Bank of Baroda is also offering interest at 5.25 per cent on such FDs. DCB Bank and Union Bank of India will get Rs 2.10 lakh and Rs 1.98 lakh on FDs for 5 years respectively.