Tax-Saving Fixed Deposit 2026
5-year lock-in FD that gives a deduction of up to ₹1.5 lakh in the old tax regime — bank-wise rates, rules, and whether it still makes sense under the new regime.
Updated 30 September 2026 · 25 banks trackedWhat you need to know
A tax-saving FD is a 5-year fixed deposit that qualifies for deduction under Section 80C of the Income-tax Act, 1961 — carried into Section 123 of the Income-tax Act, 2025 from tax year 2026-27. You can invest up to ₹1.5 lakh in a financial year (together with PPF, ELSS, EPF, life insurance premium, etc.). The deduction is available only in the old tax regime; under the default new regime it gives no tax benefit, so it is then just an ordinary 5-year FD with a lock-in.
Tax-saver FD rates by bank
| Bank | General | Senior citizen | ₹1.5 lakh after 5 years |
|---|---|---|---|
| IDFC FIRST Bank | 6.75% | 7.00% | ₹2,09,625 |
| YES Bank | 6.75% | 7.50% | ₹2,09,625 |
| RBL Bank | 6.70% | 7.20% | ₹2,09,110 |
| IndusInd Bank | 6.65% * | 7.15% * | ₹2,08,596 |
| Tamilnad Mercantile Bank | 6.60% * | 7.10% * | ₹2,08,084 |
| ICICI Bank | 6.50% | 7.10% | ₹2,07,063 |
| Axis Bank | 6.50% * | 7.25% * | ₹2,07,063 |
| HDFC Bank | 6.40% | 6.90% | ₹2,06,047 |
| Federal Bank | 6.40% * | 6.90% * | ₹2,06,047 |
| Bank of Baroda | 6.30% | 6.90% | ₹2,05,035 |
| Kotak Mahindra Bank | 6.25% * | 6.75% * | ₹2,04,531 |
| Bandhan Bank | 6.25% | 7.25% | ₹2,04,531 |
| IDBI Bank | 6.25% | 6.75% | ₹2,04,531 |
| Canara Bank | 6.25% | 6.75% | ₹2,04,531 |
| Standard Chartered Bank | 6.25% * | 6.75% * | ₹2,04,531 |
| Karnataka Bank | 6.15% * | 6.55% * | ₹2,03,526 |
| Punjab National Bank | 6.10% * | 6.60% * | ₹2,03,026 |
| Indian Overseas Bank | 6.10% * | 6.60% * | ₹2,03,026 |
| State Bank of India | 6.05% | 7.05% | ₹2,02,526 |
| Union Bank of India | 6.00% | 6.50% | ₹2,02,028 |
| Central Bank of India | 6.00% * | 6.50% * | ₹2,02,028 |
| Bank of India | 6.00% | 6.75% | ₹2,02,028 |
| Indian Bank | 6.00% | 6.50% | ₹2,02,028 |
| South Indian Bank | 5.70% | 6.20% | ₹1,99,063 |
| Bank of Maharashtra | 5.00% * | 5.50% * | ₹1,92,306 |
* Bank does not publish a separate tax-saver rate; its regular 5-year rate is shown, which normally applies. Maturity uses quarterly compounding, before tax.
Key rules
| Rule | Details |
|---|---|
| Lock-in | 5 years — no premature withdrawal (except on death of the depositor) |
| Deduction | Up to ₹1.5 lakh per FY under 80C / Sec 123 (old regime only) |
| Minimum | ₹100 – ₹1,000 depending on the bank |
| Loan / pledge | Not allowed |
| Interest | Fully taxable at slab rate; TDS applies |
| Joint account | Only the first holder can claim the deduction |
| Who can open | Resident individuals and HUFs; not NRIs |
Does a tax-saver FD still make sense?
| Your situation | Verdict |
|---|---|
| Old regime, 30% slab | Saves up to ₹46,800 tax on ₹1.5 lakh (incl. 4% cess); interest still taxable |
| Old regime, 5%–20% slab | Useful if you have not exhausted the ₹1.5 lakh limit with EPF/PPF |
| New regime | No deduction — a regular FD with no lock-in is usually better |
Tax-saver FD vs other Section 80C options
| Instrument | Return | Lock-in | Tax on returns |
|---|---|---|---|
| Tax-saver FD | ≈5.85% – 7.00% (bank) | 5 years | Interest taxable |
| PPF | 7.1% | 15 years | Tax-free (EEE) |
| ELSS | Market-linked | 3 years | LTCG 12.5% above ₹1.25 lakh |
| NSC | 7.7% | 5 years | Interest taxable (deemed reinvested qualifies) |
| Post Office 5-yr TD | 7.5% | 5 years | Interest taxable |
| SCSS (60+) | 8.2% | 5 years | Interest taxable |
Frequently asked questions
Can I break a tax-saver FD?
No, except on the depositor’s death. It also cannot be pledged for a loan.
Is the interest tax-free?
No. Interest is taxed every year at your slab rate and TDS applies above the threshold.
Can I invest more than ₹1.5 lakh?
You can, but the deduction is capped at ₹1.5 lakh a year across all 80C investments.
Is it useful in the new tax regime?
No deduction is available in the new regime.
Information is for education and comparison. Rates and rules change — confirm with your bank and a tax adviser before investing. FinancePortal is not a financial or tax adviser.