DCB Bank and Yes Bank offer interest rates of 6.75% on tax savings deposits.Tax planning decisions should be made with caution, taking into account your financial goals. With the announcement of the second wave of the COVID-19 epidemic and the downside announced in many Indian provinces, the equity market is changing. In this case, investing in an equities linked to equity plan (ELSS) for tax purposes may be risky.
Investments in five-year fixed deposits (FDs) provide assistance to investors in this regard. Also, investors prefer FDs, as the return is guaranteed. Those in the lower tax brackets will find bank FDs more attractive.
By investing in these FDs, you can take advantage of section 80C tax deductions. Investments of up to Rs 1.5 lakh may be required for tax exemption under section 80C of the Income Tax Act. Tax-saving FDs have a five-year detention period and early withdrawal is not allowed.
Although bank FD rates have plummeted, there are some banks that offer attractive interest rates.
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Small private banks offer high interest rates
Small private banks offer interest rates of up to 6.75 percent on FDs tax-saving, according to data compiled by BankBazaar. These interest rates on FDs are high tax savings compared to leading state-owned banks.
DCB Bank and Yes Bank offer interest rate of 6.75% on tax savings deposits followed by RBL Bank which pays interest on 6.6% on FDs for tax savings for five years.
Suryoday Small Finance Bank offers 7.25 percent interest on tax-saving FDs. It is followed by Ujjivan Small Finance Bank and AU Small Finance Bank which offers 6.75% and 6.25% interest respectively on these FDs. Interest rates are offered by smaller financial banks compared to leading private banks. Foreign banks such as Deutsche Bank and Citi Bank offer 6.25 percent and 3.50 percent interest on FDs that save taxes.
Private banks such as Axis Bank, ICICI Bank and HDFC Bank offer 5.75 percent, 5.35 percent interest and 5.30 interest respectively on FDs that save taxes.
The highest rate offered by the public sector bank on FD’s five-year tax savings is Union Bank of India which gives 5.55 percent interest, followed by Canara Bank and State Bank of India (SBI) with 5.50 percent interest and 5.40% interest on tax savings. -FDs respectively. Bank of Baroda offers 5.25 percent interest on tax-saving FDs.
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The amount of Rs 1.5 lakh spent on DCB Bank and Union Bank of India tax-saving FDs grows to Rs 2.10 lakh and 1.98 lakh, respectively, after five years.
Small private banks and small financial banks with a low customer base often offer high prices to attract customers and investors. That is why state-owned banks offer lower rates. Just because a bank offers you a higher price does not mean you have to invest in it. Go for higher prices, but also go to big banks with strong management and finances.
