As you all are aware that banks have reduced rates of interest since last few years and we get around 5% interest only on our Fixed deposits kept with banks that too before tax, we have to pay tax also on the interest earned on Fixed deposits.
But now, there are some banks which are paying 6.75% of interest that too TAX FREE but there is a lockin period before that we can’t en-cash these Fixed Deposits. Investments of up to Rs 1.5 lakh can be claimed for tax 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.
Below I have mentioned various banks which are providing 6.75% Tax Free Interest on Fixed Deposits.
- Suryoday Small Finance Bank offers interest rates of up to 6.75 percent on tax-saving deposits. Among small finance banks, Suryoday offers the best interest rates. A sum of Rs 1.5 lakh invested grows to Rs 2.10 lakh in five years.
- Ujjivan Small Finance Bank also gives interest rates of up to 6.40 percent on tax-saving deposits. A sum of Rs 1.5 lakh grows to Rs 2.06 lakh in five years.
- IndusInd Bank is offering interest rates up to 6 percent on tax-saving deposits. A sum of Rs 1.5 lakh grows to Rs 2.02 lakh in five years.
- RBL Bank is offering interest rates up to 6.3 percent on tax-saving deposits. A sum of Rs 1.5 lakh grows to Rs 2.05 lakh in five years.
- Deutsche Bank, IDFC First Bank and Yes Bank offer up to 6.25 percent on tax-saving deposits. Among foreign banks, Deutsche offers the best interest rate. A sum of Rs 1.5 lakh grows to Rs 2.05 lakh in five years with these banks.
The smaller private banks and small finance banks are offering higher interest rates to garner newer deposits. The Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI, guarantees investments in fixed deposits of up to Rs 5 lakh.
There are some more private small finance firms providing rates 6.75% or above. But above mentioned banks are reputed and trustworthy banks we can park our funds with. Risk with these banks is almost zero so don’t hesitate, select the best one for your Tax Saving Needs.