BENGALURU: With the financial year coming to an end, many people are unsure of how to save tax by opting for tax saver fixed deposit (FD). Tax saver FD is a type of fixed deposit by investing in which you can get tax deduction under section 80C of the Indian Income Tax Act, 1961. Tax saver deposits are available in two different types: Single holder Type Deposits and Joint holder Type Deposits and is offered for a lock-in period of 5 years. Axis Bank, ICICI Bank, HDFC Bank, SBI Bank, and IDBI Bank are the top most banks offering tax saver fixed deposit for five years. With tax saver fixed deposit, deduction is available for  individuals, members of Hindu Undivided Family (HUF), senior citizens and NRIs. The interest earned from tax saver fixed deposits is taxable and premature withdrawal is not available. Tax saver deposits can be opened both singly and jointly. In case of a joint account, tax benefit will be availed by first holder of the deposit as per the section 80C of the Income Tax Act, 1961. Below is the list of the five smart facts about tax saving fixed deposit, reports Economic Times:

Tax Saving Fixed Deposit Account

HUFs and individuals can claim tax deduction up to Rs 1.5 lakhs by opening a tax saving fixed deposit account in a financial year for the amount invested.

Deposits Available for 5-year Tenures

With tax saving FD you deposit for 5-year tenures and an account can be opened with any bank, except cooperative and rural banks.

Maturity Proceeds Tax-Exempt

The interest earned is taxable at the marginal rate applicable to the tax holder, while the maturity proceeds are tax-exempted.

Tax-saving Deposits Locked For 5-Year

Tax-saving deposits are locked for a 5-year period and not available for premature encashment or pledging for a loan.

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