“Learn how to save tax with fixed deposits (FDs). Discover updated interest rates as of March 19, 2025, benefits, and a step-by-step guide to investing in tax-saving FDs before March 31. Start saving tax today!”
As March 2025 draws near, people are actively looking for strategies to lower their tax obligations while maintaining a steady growth in their savings. FDs, or tax-saving fixed deposits, are among the most well-liked and reliable options. Along with guaranteed returns, these FDs also offer tax advantages under Section 80C of the 1961 Income Tax Act. We’ll go over all you need to know about tax-saving FDs in 2025 in this blog, including tips on how to invest before the March 31 deadline, updated interest rates, and benefits.
What Are Tax-Saving Fixed Deposits?
Banks and other financial institutions offer a unique kind of FD called a tax-saving fixed deposit (FD), which enables you to deduct taxes on the principal amount of your investment. The interest earned on these FDs is taxable according to your income tax slab, and they have a 5-year lock-in period.
Key Features of Tax-Saving FDs in 2025
- Lock-in Period: 5 years; early withdrawal is not permitted.
- Tax Deduction: Section 80C allows for a deduction of up to ₹1.5 lakh every fiscal year.
- Interest Rates: Depending on the bank, interest rates usually fall between 6% and 8%.
- Eligibility: Those who are individuals or Hindu Undivided Families (HUFs) are eligible.
- Level of Risk: Minimal risk, assured profits.
Why Invest in Tax-Saving Fixed Deposits in 2025?
- Tax Benefits: Section 80C allows you to deduct up to ₹1.5 lakh from your taxable income.
- Guaranteed Returns: Unlike market-linked investments, take advantage of fixed and predictable returns.
- Low Risk: Among the safest investment options are bank savings accounts.
- Disciplined Savings: Long-term financial discipline is guaranteed by the 5-year lock-in period.
- Wide Availability: Most banks offer this, which makes investing simple.
How to Invest in Tax-Saving Fixed Deposits Before March 31, 2025
Putting money into a tax-saving FD is an easy and straightforward process. Here is a detailed how-to:
Top Banks Offering Tax-Saving FDs as of March 19, 2025
- Compare and analyse interest rates. Examine the most recent interest rates that various banks and financial organisations are offering. SBI, HDFC Bank, ICICI Bank, and Axis Bank are a some of the leading banks that will have competitive rates in 2025.
- Select the Right Bank
Choose a bank that provides the best terms and interest rate for your financial objectives. - Submit the required documents
To open a tax-saving FD account, you must present the required paperwork, including your PAN card, proof of address, and identification. - Make an investment by March 31, 2025
Make sure you invest before the March 31 deadline in order to collect tax benefits for the fiscal year 2024–2025. - Claim Tax Deduction in Your ITR
Mention the investment in your income tax return (ITR) under Section 80C to avail the tax benefit.
Here’s a quick comparison of interest rates offered by leading banks as of March 19, 2025:
| Bank | Interest Rate (General Citizens) | Interest Rate (Senior Citizens) |
|---|---|---|
| Axis Bank | 7.00% p.a. | 7.75% p.a. |
| HDFC Bank | 7.00% p.a. | 7.50% p.a. |
| ICICI Bank | 7.00% p.a. | 7.50% p.a. |
| IDBI Bank | 6.50% p.a. | 7.00% p.a. |
| RBL Bank | 7.10% p.a. | 7.60% p.a. |
| SBI | 6.50% p.a. | 7.50% p.a. |
| Federal Bank | 7.10% p.a. | 7.60% p.a. |
| Indian Bank | 6.25% p.a. | 6.75% p.a. |
Conclusion
One of the most reliable and low-risk investment choices for reducing taxes under Section 80C and generating assured returns is still tax-saving fixed deposits. Now is the ideal moment to consider your alternatives and make an investment in a tax-saving FD that fits your financial objectives, especially because the deadline of March 31, 2025, is drawing near.
Keep in mind that every rupee saved on taxes is an earned rupee. Make the most of your investments before the fiscal year ends by investigating tax-saving FDs now!
Disclaimer
Before making any investment decisions, please speak with a financial advisor or tax counsellor. This blog is for informational purposes only, and the interest rates and terms indicated are based on data as of March 19, 2025, and are subject to change.
FAQs About Tax-Saving Fixed Deposits in 2025
- Can I take my tax-saving FD out before it’s been five years?
No, there is a five-year lock-in period required for tax-saving FDs. It is not permitted to withdraw too soon. - Is interest paid on FDs that save taxes taxable?
Yes, the interest earned is taxed as per your income tax slab. - Can my tax-saving FD be used as collateral for a loan?
No, loans are not allowed against tax-saving FDs due to the lock-in period. - What is the maximum amount I can invest in a tax-saving FD?
You can invest up to ₹1.5 lakh per financial year to get tax benefits under Section 80C. - Are tax-saving FDs better than other Section 80C investments?
Tax-saving FDs are perfect for risk-averse investors that desire guaranteed profits. Other options, such as PPF, NPS, or ELSS, may provide greater returns, but they also carry risks related to the market.
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