Tax-saving fixed deposits (FDs) are a popular investment choice in India, providing safety and predictable returns. These bank-backed instruments allow individuals to earn interest while receiving tax benefits. Under Section 80C of the Income Tax Act, investments in tax-saving FDs qualify for deductions of up to ₹1.5 lakh per financial year. However, the interest earned on these deposits is taxable.

The tax-saving FDs come with a 5-year lock-in period, meaning the invested principal cannot be withdrawn before maturity. Interest rates for these FDs typically range from 5.5% to 7.90% per annum. Currently, Suryoday Small Finance Bank offers the highest rate at 7.90%, followed by Jana Small Finance Bank at 7.77%. Among private sector banks, DCB Bank provides 7.25%, while Bank of Baroda leads the public sector banks with a rate of 6.30%.

These fixed deposits are particularly suitable for risk-averse investors, especially those nearing retirement or already retired, who seek stable and assured returns. Any Indian resident, including senior citizens, Hindu Undivided Families (HUFs), and Non-Resident Indians (NRIs), can invest in tax-saving FDs.