Fixed deposits or Term deposits are investment instruments offered by a large number of banks and Non-Banking financial Organisations and considered as one of the safest options for investments to enjoy tax benefits. Unlike other investment schemes like Mutual Funds, equity funds, and gold, fixed deposits have a low risk and also offer high-interest rates. The good part is investing in FD is easy, secure and open to all residents including minors and HUFs( Hindu Undivided Family Account)

Features of Tax saving Fd Accounts:

  • The fixed deposit rates generally range from 6.5% to 8.5% and vary from bank to bank.
  • The principal amount invested in FD is exempt from taxes.
  • You need to deposit a minimum of Rs. 1000 in your FD accounts. The minimum funds to invest in an FD account varies from bank to bank.
  • You can invest in FD for as long as 20 years. 

Tax Deduction on Fixed Deposits

While investing in FD is a good idea, you must also know that you need to pay hefty taxes on your return on FD investments. However, you can claim tax deductions up to Rs. 1.5 Lakhs in a financial year on your fixed deposits. under Sec 80 C of the Income Tax Act

Here are TDS tax rate conditions for an FD account that you need to know:

  1. If investment in FD accounts in a bank is less than Rs. 10,000- No taxation
  2. If the interest earned on FD investment is more than Rs 10,000- 10%
  3. If the income of all sources is less than Rs. 2.5 Lakhs- No taxation

Want to save on your taxations? Here are some tax-saving hacks to keep more on Fixed deposit rate:


  1. Dividing the funds you wish to invest in FD: If you are planning to invest a lump-sum amount in your FD accounts, divide the funds and invest in different FD’s instead of investing in a single FD account. This will not only help you to save taxation but also get a good return on your investments.
  2. The timing of investing in FD: Investing in the mid of the financial year is a hack you can use to invest in tax saving FD. This way, the interest earned on your investments won’t exceed Rs. 10,000. Say, you invest your funds in FD accounts in October for 1 year and the financial year ends in March. So, planning your investment in this way will divide the taxes into 2 parts and thus help you to save taxes.
  3. Investing in a HUF Fixed deposits account: If you belong to a Hindu family, then all the members of your family can form a Hindu Undivided Family as opening a HUF FD account can help you to save taxes. Instead of opening a separate FD account, open a HUF account as HUF is taxed separately from the individual members of the family.
  4. Submitting your 15G/15H form: If you want to save taxes on your investment, you can provide a 15G form to the banks. Submitting the 15G forms means that you are declaring that you don’t have a taxable income, and thus, the bank will deduct the taxes on FD interest rates. Senior Citizens can submit form 15H to save taxes on the Fixed deposit rate.



With secure and heavy returns, the tax-savings fixed deposits have always been a popular investment choice for individuals. However, the taxation on fixed deposit rates is a factor you need to look at before investing in an FD, which can surely be overlooked if you can save taxes on your investments by prudently planning your investments and getting high returns on your investments.

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