As the coronavirus pandemic has hit the market hard, people are looking to invest in safer options like fixed deposits (FDs). In order to preserve their capital, investors are moving away from market-linked investments. They are going for FDs, despite interest rates going down over the last one year.
Some conservative investors like to go with tax-saving FDs to make use of Section 80C, which provides deduction benefits. Under Section 80C, investors can claim deduction for investments up to Rs 1.5 lakh.
Those interested in buying tax-saving FDs should note that they have a locking period of five years. Besides, one cannot withdraw it without the tax-saving attaining maturity.
Moneycontrol has shared annual interest rates offered by private and public sector banks on tax-saving FDs.
Among private banks, DCB bank is offering the highest annual interest rates at 6.95 per cent. If a person invests Rs 1.5 lakh in DCB Bank, it will grow to Rs 2,11,696 in five years.
IDFC First Bank, IndusInd Bank and Yes Bank give an annual interest rate of 6.75 per cent. Investment of Rs 1.5 lakh in these banks will provide Rs 2,09,625.
On the other hand, RBL Bank provides annual interest of 6.5 per cent. It means Rs 1.5 lakh will yield Rs 2,07,063.
Among public sector banks, Punjab and Sind Bank offers the highest annual interest rate of 5.55 per cent.
Investment of Rs 1.5 lakh in this bank will provide Rs 1,97,597 after five years.
State Bank of India gives annual interest of 5.4 per cent. If an investor puts in Rs 1.5 lakh in SBI, he will get Rs 1,96,140 in five years.
Bank of Baroda, Canara Bank and IDBI Bank provide annual interest of 5.3 per cent. Investing Rs 1.5 lakh in these three banks will give Rs 1,95, 175.
According to Moneycontrol, smaller private banks have comparatively higher interest rates. They provide annual interest rate of up to 6.95 per cent.
The interest rates offered by HDFC Bank, Axis Bank and ICICI Bank hover around that provided by public sector banks. HDFC Bank gives interest of 5.3 per cent, ICICI Bank 5.35 per cent and Axis Bank 5.5 per cent.