What is a Tax-Saving FD?

One of the ways in which you can save tax is by investing money in a tax-saving Fixed Deposit. So, what is a five-year tax-saving FD? 

Under section 80c of the Indian income tax act, you can invest up to Rs 1.5 lakh in specific financial products, and claim tax deduction on the amount invested. The 5 year Tax Saving Fixed Deposit is one such product – others include equity-linked savings schemes, public provident fund, insurance premiums etc. You can choose to invest the entire Rs 1.5 lakh in one product or spread it across multiple products.

How much tax can I save with a tax-saving FD?

The amount of tax you can save will depend on the tax bracket you are in and the sum you invest in the FD. If you are in the highest tax-bracket (of 30%) and put Rs 1.5 lakh in the tax-saving FD, you can save up to Rs 46350 (Rs 45,000 in tax, plus Rs 1350 in cess).

How much can I invest in the five-year tax-saving FD?

You can invest anywhere between Rs 100 and Rs 1.5 lakh in a financial year in the Fixed Deposit.

What is the tenure of this FD?

The tenure of the FD is five years. But unlike regular FDs, you cannot prematurely withdraw or liquidate these FDs. The FD has a five-year lock-in.

What is the interest rate on a tax-saving FD?

Interest rates change over time. You will get the same rate of interest that is applicable to a regular 5-year Fixed Deposit. Click here for FD interest rates.

You can create your Fixed Deposit Asset today with an HDFC Bank Savings Account. New customers can book a Fixed Deposit by opening a new Savings Account, existing HDFC Bank can book their Fixed Deposit by clicking here.​​​​​​​

How will I receive the interest amount?

You can opt for a monthly or quarterly pay-out of interest or you can choose to reinvest the interest.

Is this interest taxable?

Yes, the interest is taxable in line with your tax slab. Besides, the bank will deduct TDS at 10% if your interest income across all deposits and branches exceeds Rs 10,000 in a FY. If you haven’t submitted your PAN, the bank will deduct TDS at 20%

Can I open a joint tax-saving FD?

Yes, you can open a joint FD. But only the first holder can claim tax benefit under section 80c.

Use FD Interest Calculator and Get details of maturity amount and interest earned on deposits.