Benefits of Tax Saver Fixed Deposits

2 MinsApr 04, 2023

For most investors, Tax Saver Fixed Deposits are an appealing investment option. They offer fixed and secured returns over five years as well as offer tax exemption on the lump sum amount invested. You can also choose the interest payout option that is most suited for you from among - reinvestment deposit, quarterly interest payout, or monthly interest payout. These features make the Tax Saver FD suitable for risk-averse or conservative investors. Even aggressive investors can hold a small portion of their investment in Tax Saver FDs, as it offers a safety net to their portfolios.

Benefits of Tax Saver Fixed Deposits

What is a Tax Saver FD?

FDs are commonly preferred for savings because they provide a fixed interest rate for a certain period. Tax-saving fixed deposits are a type of FD with a tax benefit to the depositor. The amount invested in a Tax Saver FD is exempt up to Rs 1.5 lakh, under Section 80C of the Income Tax Act. As with any other FD, you can deposit a lump sum to receive a fixed interest rate for a specific duration. Due to this, Tax Saver FDs are a desirable choice for those who want to save money while lowering their tax obligations. 

How to invest in a Tax Saver FD?

Investing in Tax Saver FDs is easy and convenient. Here's a step-by-step guide:

  • Visit the bank website: Go to the website and click on the "Fixed Deposit" section.
  • Choose your investment amount: Decide on the amount you wish to invest and the tenure for which you want to keep the deposit. You can invest maximum up to Rs. 1.5 lakh in a financial year
  • Fill out the application form: Fill out the online application form with your tax saver deposit details and submit the necessary documents.
  • Make the payment: Pay for your Tax Saving Fixed Deposits through direct transfer from your savings account.
  • Receive confirmation: Upon submission of the application, you will receive your Tax Saver FD advise from the branch.
  • Track your investment: You can track the status of your FD through the Internet Banking, Mobile Banking, or by visiting a branch.

Also Read: [How Bank Fixed Deposits affect your taxes]

Benefits of Tax Saver FD

A Tax Saver FD is a fixed deposit that provides several benefits to the depositor. Here are some of the key benefits:

1. Tax benefits: The most significant benefit of a Tax Saver Fixed Deposit is the tax advantage under Section 80C of the Income Tax Act, 1961. You can claim a tax deduction of up to Rs. 1.5 lakh in a financial year on the amount invested in a Tax Saver FD.

2. Safe and secure investment:  Since Tax Saver FDs are bank FDs, they are a safe and secure investment option.

3. Fixed rate of interest: Tax Saver FDs offer a fixed interest rate on deposits for the specified tenure, higher than regular savings account interest rates. It makes it a more appealing option for you to earn a higher rate of return on your investments.

4. Regular income:  Tax Saver FD can also provide a regular source of income in the form of interest earned on the deposit, provided you opt for a quarterly or monthly interest payout option. It makes them suitable for earning a steady income and ensuring financial stability.


Tax Saver FDs are an attractive investment option for individuals looking to save for the long term, reduce their tax liability, and earn a higher rate of return. The deposit offers the added benefits of safety, security, and stability, making it a suitable option for individuals of all ages and financial backgrounds.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.