1 Like
You are not the only one wondering what is a tax-saver fixed deposit? It’s a special type of fixed deposit where your amount is locked in for 5 years and that helps you save tax under Section 80C of the Income Tax Act.
Let’s break it down. Normally, when you open a regular FD, you earn interest but you don’t get any tax benefit on the amount you invest. But with a Tax Saver FD, you can claim a deduction of up to ₹1.5 lakh in a financial year from your taxable income.
But the lock-in period is 5 years which means once you invest, you can’t withdraw the money before 5 years. So, it’s not ideal if you want flexibility or early access to your money. But if your goal is to save tax and earn steady returns with low risk this FD is the right one.
Also, Interest earned on this FD is taxable, so while you save on the investment part, you may still need to pay tax on the returns depending on your income slab.
Banks like SBI, HDFC, ICICI and many others offer Tax Saver FDs usually for individuals and HUFs and the minimum amount to start is often around ₹1,000 or so. So, if you’re planning your taxes and looking for a safe, fixed return option, a Tax Saver FD can be a smart move to tick off two goals at once: saving money and saving tax.