Tax planning before March 31 deadline? Tax saving fixed deposits with high interest rates – check list

A Tax Saving FD represents a particular time period deposit that gives tax benefits below Section 80C. (AI picture)

It’s that point of the yr once more while you scramble for final minute tax saving investments. Those who systematically organized their tax-saving investments all year long stay relaxed, while final-minute planners are dashing to maximise deductions and choose applicable funding autos.
With the monetary yr concluding in a fortnight, people should compute tax financial savings, check investments and determine on a correct tax saving technique. Amongst the tax-saving alternate options, a Tax-Saving Fixed Deposit (FD) is a well-liked possibility for conservative traders. It is price noting that tax saving funding avenues must be thought-about solely if you’re submitting your earnings tax return below the outdated tax regime.
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What is a Tax Saving FD?

A Tax Saving FD represents a particular time period deposit that gives tax benefits below Section 80C of the Income Tax Act, 1961. It permits traders to say a deduction as much as Rs 1,50,000 from their taxable earnings inside a fiscal yr. These deposits keep a fixed interest fee all through their 5-yr length, making certain dependable and safe funding returns.
According to an ET report, the 5-yr obligatory lock-in length prohibits early withdrawals from the fixed deposit. This ensures the funding grows all through the required interval.

Tax Saving FDs: Interest Rates

*Data as on March 18, 2025 quoted from ET

Tax Saving FDs: How Does Interest Taxation Work?

A tax profit as much as Rs 1,50,000 is out there yearly via Section 80C deductions below the outdated earnings tax regime. This provision permits people to lower their taxable earnings, leading to diminished tax obligations.
The tax benefit is proscribed to the preliminary funding quantity, excluding any interest earnings. Interest earnings turns into a part of the full taxable earnings and attracts tax based mostly on the person’s earnings tax bracket.
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Banks withhold Tax Deducted at Source (TDS) when interest earnings surpass Rs 40,000 yearly (Rs 50,000 for senior residents).
During earnings tax return (ITR) submitting, people can request refunds or alter TDS quantities if their complete tax legal responsibility falls under the deducted TDS.
Tax Saving FDs differ from normal fixed deposits as they don’t assist mortgage or overdraft amenities. These deposits lack automated renewal choices, requiring handbook reinvestment put up-maturity if desired.