Investing in tax-saving fixed deposits (FDs) is a smart way to grow your savings while enjoying tax benefits. By investing in these schemes, you can claim a tax deduction of up to ₹1.5 lakh annually under Section 80C of the Income Tax Act. These deposits have a five-year lock-in period, and the interest rates typically range between 5.5% and 7.75%.
The interest earned on these FDs is taxable, but the principal amount is eligible for tax deduction. Financial institutions offer flexible payout options, allowing you to choose between cumulative and non-cumulative payouts. You can also invest up to ₹3 crore, although the tax benefit is capped at ₹1.5 lakh.
To estimate the maturity amount, you can use a fixed deposit calculator. It’s important to compare the rates offered by different financial institutions and check their security ratings before making an investment.
