The end of a tax year often brings an important investment decision: where to place surplus money? A tax-saving fixed deposit can combine a fixed-return investment with an eligible tax deduction. However, the benefits depend on the applicable tax regime and the bank’s terms. Interest rates, deposit amounts and payout options can vary, making comparison useful before investing.
For investors considering a fixed deposit online, checking the interest rate, lock-in period, maturity value and tax treatment can help them understand which option suits their financial needs.
What is a Tax-Saving Fixed Deposit?
A tax-saving fixed deposit is a bank term deposit with a minimum five-year period that can qualify for a deduction under Section 123 of the Income Tax Act, 2025, subject to the applicable conditions. Section 123 provides an aggregate deduction of up to INR 1.5 Lakh for specified savings instruments for individuals and Hindu Undivided Families (HUFs). The qualifying investments are listed in Schedule XV of the Act.
A term deposit with a scheduled bank for a fixed period of at least five years is included among the qualifying investments under Schedule XV, subject to the prescribed conditions.
The main features include:
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Deduction limit: Eligible investments can qualify for a combined deduction of up to INR 1.5 Lakh under Section 123.
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Five-year period: A qualifying tax-saving FD must have a fixed period of at least five years.
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Tax regime: The Section 123 deduction is available under the applicable old tax regime and cannot be claimed under the new tax regime under Section 202.
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Interest taxation: Interest earned on the FD remains subject to applicable income tax provisions.
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Eligible taxpayers: Individuals and HUFs can claim the deduction, subject to the conditions under Section 123 and Schedule XV.
The Income Tax Act, 2025 applies to tax years beginning on or after 1 April 2026. Earlier tax years remain governed by the Income Tax Act, 1961.
Why Compare Tax-Saving FDs Across Banks?
A five-year investment period makes it useful to review the terms offered by different banks before booking a deposit. Interest rates, minimum deposit amounts and interest payout options can differ between institutions.
The JioFinance service helps investors review available FD options in one place and compare key details before choosing an option.
What Should You Compare?
Looking at these factors together helps investors understand the full terms instead of focusing only on the interest rate.
Compare Different Bank Options
Eligible banks can offer tax-saving FDs with different interest rates and product terms. Public sector banks and private sector banks may have different rates, service features and account opening processes.
Each investor may have different requirements. Some may focus on the interest rate, while others may consider the payout option, account opening process or banking access.
Eligible deposits with insured banks are covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to INR 5 Lakh per depositor per bank, including principal and interest, subject to applicable conditions. Deposits held across different branches of the same bank are generally aggregated when calculating this limit.
How JioFinance Can Help Compare FDs
Comparing several tax-saving FD options can involve checking information from multiple bank websites. A platform that brings participating bank options together can make it easier to review the available information.
Through JioFinance, investors can compare available FD options based on details such as interest rates, tenure and other applicable terms before proceeding with an investment.
The process can help investors:
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Review multiple options: Available deposits can be viewed in one place.
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Compare key details: Interest rates, tenure and other terms can be reviewed together.
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Access online options: Where supported, investors can complete the booking process online.
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Understand the terms: Comparing several options can help investors assess the differences between deposits.
Interest rates, availability and product terms are determined by the respective banks and may change over time.
How to Choose a Tax-Saving FD
After comparing available options, investors can consider their financial requirements and tax position.
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Check the interest rate: Review the rate offered for the complete five-year period.
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Review the maturity amount: Check the amount payable at maturity based on the applicable interest calculation.
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Confirm tax eligibility: Ensure the investment qualifies under Section 123 and Schedule XV.
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Check the tax regime: Confirm that the selected tax regime allows the deduction.
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Consider the lock-in: Ensure the money can remain invested for at least five years.
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Review payout options: Compare cumulative and periodic interest options based on your cash-flow needs.
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Check DICGC coverage: Review the applicable deposit insurance for the bank.
Conclusion
Tax-saving FDs can provide fixed returns along with an eligible deduction of up to INR 1.5 Lakh under Section 123 and Schedule XV of the Income Tax Act, 2025. Comparing interest rates, maturity values, deposit terms and tax treatment across banks helps investors understand their options. JioFinance can simplify this comparison by bringing available FD information together for review before booking.
