Tax Saving Fixed Deposit vs Post Office Term Deposit Which one is offering the highest interest rate; Check Details to Save Tax

Financial Year 2021-22 is about to end in a Few days. We need to do the investments before 31st March 2022 in order to Save Income Tax. There are lot of options to save tax and get a deduction under Section 80C of Income Tax. But in this article, we are comparing Tax Saving Fixed deposit and Post office Term Deposit.

Tax Saving Fixed Deposit

5 Years Tax-saving FDs are one of the most popular solutions to reduce your taxable income. The money invested in a Fixed deposit is secure, the returns are guaranteed, and the interest rate is also Fixed. Under Section 80C of the Income Tax Act, tax-saving FDs are eligible for a deduction of up to Rs.1.5 lakh. If you’re looking to invest for the medium term while still saving money on taxes, these tax-saving FDs with a 5-year lock-in period could be ideal. Please note that TDs is applicable on Interest earned on Fixed Deposit.

Banks are giving 5.20 percent to 5.60 percent interest rates on tax-saving FDs, respectively. There are many other Banks Like RBL, IDFC, DCB offering more than 5.80 % Interest Rates.

Post Office TD

The deposit you made in the 5-year fixed deposit account qualifies for an income tax deduction under Section 80C of the Income Tax Act of India, 1961. Time deposit at the post office Interest is paid on a quarterly basis but is paid annually. A 6.7 percent interest rate is available on a 5-year post office time deposit.

If we compare only interest rates, you will find that the Post Office time deposit has the greatest rate when compared to other bank fixed deposits. But one needs to look into the tenure as well before taking the decision of Investment.