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Save on your taxes and enjoy benefits with this 5-year fixed deposit

Tax Saver Fixed Deposit

Get attractive interest rates on your lump sum investment as well as the benefit of tax saving with Axis Bank's Tax Saver Fixed Deposit. Invest from a minimum amount of Rs. 100 to a maximum of Rs. 1,50,000. The Tax Saving Fixed Deposit comes with 3 options. Choose from Tax Saving - Reinvestment Deposit, Tax Saving - Quarterly Interest Payout or Tax Saving – Monthly Interest Payout depending on the interest pay-out most suitable for you.

Tax Deductible on Fixed Deposits

A Tax-saving Fixed Deposit (FD) is an investment option offered by banks and non-banking financial companies. A tax-saver FD has a lock-in period of 5 years and offers a higher rate of interest than a regular savings account. Moreover, regular savings accounts also do not offer any tax benefits.

A tax-saving FD offers tax deductions under section 80C of the Income Tax Act, 1961 of up to ₹1,50,000 in a year. This amount is deducted from an individual’s total gross income, arriving at the taxable income. Hence, by investing in a tax-saver fixed deposit, you can reduce your taxable income and thereby, save on the tax payable on your income.

When you apply for tax-saver fixed deposits, any interest over ₹40,000 is taxable per FY 2020-2021. For FY 2019-2020, this amount was ₹10,000. The interest yielded gets added to your total income in a year. The interest earned under tax deductible fixed deposits comes under the category of income earned from other sources under the Act. So, the tax applicable will be tax deducted at the source (TDS).

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How to Avoid TDS on FDs?

  • Tax-saving with form 15G

  • You can avoid TDS on tax-saving fixed deposits if your annual income is below ₹2,50,000. You can use form 15G and submit it to your bank. Form 15G works as proof to the government that your income is below the taxable limit and that you don’t have to pay tax.

  • Tax-saving with form 15H

  • Form 15H is for senior citizens above the age of 60 years whose income does not exceed ₹2,50,000 in a year. Senior citizens can use form 15H to claim tax exemption under the interest earned in their fixed deposits.

  • Tax-saving with a joint applicant

  • You can avoid TDS on tax-saving fixed deposits if you make a joint application for the fixed deposit. In joint applications, TDS gets waived off from the second applicant, and only the first applicant has to pay tax. In the case of tax-saving FDs with joint applications, tax benefits are available only for the first applicant/account holder.

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Things To Know About Tax Saving Fixed Deposits

Before you invest in tax-saver fixed deposits, here are some things to know about them:

  • Tax-saver fixed deposits give guaranteed and systematic returns.
  • Tax-saver fixed deposits are non-market-linked investments, so they carry zero risk and are safe investments.
  • Tax-saver fixed deposits give returns between 5.50% to 6.50% on average.
  • Senior citizens enjoy a higher interest rate on tax-saver fixed deposits. The interest rate is more than 0.25% to 0.5% than the general public.
  • You can save up to ₹1,50,000 in a year with tax-saving fixed deposits under s80(C) of the Income tax act.
  • You can make deposits with amounts as low as ₹100 in tax-saving fixed deposits.
  • The maximum deposit amount in tax-saving fixed deposits is ₹1,50,000.
  • Only Indian citizens and Hindu Undivided Families (HUFs) can invest in tax-saving fixed deposits.
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Comparison With Other Tax-Saving Investments

Tax-saver fixed deposit rates generally range between 5% and 7%. In comparison to other tax-saving instruments, the rate of interest is mediocre. However, the upside is that the tax-saver fixed deposit rates and returns are guaranteed and risk-free. This is because the returns do not depend on the performance of the capital or stock market. Here are some other tax-saving investments with their rate of interest:

InstrumentType of investmentInterest rateLock-in period
Equity Linked savings schemeMarket-linked10%-12%3 years
Public Provident fundGovernment scheme7%-8%15 years
National Savings certificateGovernment scheme6%-8%5 years
National pension schemeGovernment market-linked scheme8%-10%Till retirement
Unit-linked insurance planMarket-linked7%-25%5 years

Difference in Rate of Interest

InstrumentInterest rate/ returns yielded
Tax-saving fixed deposits Tax-saver FD rate of 5.3%-6.2% of a 5-year tenure
Equity-linked savings scheme (ELSS)10%-12% over five years (general historic observation)
Public provident fund (PPF)7%-8%
National savings certificate (NSC)6.8%
Sukanya Samriddhi Yojana7.6%
Unit-linked insurance plan (ULIP)Anywhere between 7%-25% depending on the tenure of the investment. The longer the tenure,the higher the interest rate accumulated.
National pension scheme (NPS)9%-12%

To know your tax-saver FD rates, you can use a fixed deposit interest rate calculator.

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Frequently Asked Questions

The minimum amount needed to open a tax-saver FD account at Axis Bank is ₹100. The maximum amount is ₹1,50,000.

No, premature withdrawal is not allowed in tax-saving deposits because the lock-in period for tax-saver fixed deposits is 5 years. Even a loan withdrawal facility is not allowed in fixed deposits tax-saver.

One can claim a tax deduction of up to ₹1,50,000 in a year with a tax-saver FD as per section 80C of the Income Tax Act.

Tax-saver fixed deposits are for those investors who don’t want to risk their money in a market-linked environment. Those who prefer risk-free, guaranteed, and safe returns should invest in a tax-free FD. The returns earned in fixed deposit tax-savers are free of risk but moderate.

No, there is little to no risk factor in tax-saver fixed deposits. Tax-saver FDs are not linked to the capital/ investment market, so they are safe from all market risks and fluctuations. In tax-saver FDs, the tax-saver FD interest rates are shown to you so you can make an informed decision.

The range of maturity available for tax-saver FDs is 5 years and 10 years. Generally, fixed deposits range from a few months to 1 year, 2 years, and so on. But tax-saving deposits have a pre-defined maturity period.

When the tax-saver FD matures, the accumulated interest and principal amount become payable to the account holder in the savings account. The account holder has the option to withdraw the accumulated returns or reinvest them. If the matured amount is left unclaimed, the amount gets shifted to the account holder’s saving account and attracts interest at the standard rate payable between 3% to 5%.

The maximum tax-saving FD interest rates available are up to 7% per annum. For the general public, it is between 5% and 6%, and for senior citizens, it is up to 7% to 7.45%.

It is very easy to open a tax-saver fixed deposit as account holders have the option of carrying out the entire process online. All you have to do is:

  1. Log in to your account on your bank portal, in this case, the Axis bank website.
  2. Click on the tax-saver fixed deposit option. Fill out the form that will appear on the screen.
  3. Add details like your account number, bank branch details, name, email id, and other details as requested. Also, add the name of the nominee you choose to receive the maturity amount in the tax-saver FD.
  4. Enter the amount you would like to deposit in the fixed deposit tax-saver account. Choose the tenure of the tax-saver FD (a minimum of 5 years in this case).
  5. On entering the amount, it will get debited, and you will get an e-receipt of debit on your email id. Remember to use a tax-saver FD calculator to see the amount payable and tax-saver FD rates payable.

You can also visit your nearest Axis branch bank to open an account.

The tax-saving FD rates remain the same during the tenure. They range between 5% and 7% in general.

A tax saver fixed deposit which is easy on your pocket.Open Tax Saver FD Online

A tax saver fixed deposit which is
easy on your pocket

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