Fixed deposit interest rates in 2021 and TDS on FDs

Fixed deposit

A fixed deposit is the most familiar and secure investment option in India. Banks are offering guaranteed returns on your deposits depending on the interest rates and the time frame opted by you.

Fixed deposit interest rates are much higher compared to saving accounts as from saving account money can withdraw any time but fixed deposits also called time deposits mean these are locked for time duration. If you want premature withdrawal it will cause some penalty.

The best thing about the FDs is that interest rates are fixed for the time horizon selected by you and it will not be affected by the bad economy or market results.

Fixed Deposit Interest Rates in 2021

Fixed deposit interest rates are not universal among all banks or NBFCs, so before investment, you have to look at them to get the best returns. For your reference and to compare them, here are the top 10 banks and their interest rates in 2021:

 

Bank Interest Rates for Regular Citizens (% P.A.) Interest Rates for Senior Citizens (% P.A.)
IndusInd Bank

6.50

7.00
Yes Bank

6.50

 7.00
India Post Office

5.50

5.50
PNB India

5.20

5.70
Axis Bank

5.15

5.80
State Bank of India

5.00

5.50
ICICI Bank

4.90

5.40
HDFC Bank

4.90

5.40
Bank of Baroda

4.90

5.40
City Bank

3.00

3.50


Also read:
Why should you Invest in a Systematic Deposit Plan?


TDS on FDs:

Interest income is fully taxable in India as per tax slab and TDS is applicable on Interest income if it exceeds the 40000 INR for the regular citizens and 50000 INR for senior citizens in one Financial year.

1) By filling the Form 15G for regular citizens and 15H for senior citizens you can avoid the deduction of TDS on your interest income.
2) Another way to avoid TDS is dividing your earned interest into the two financial years. For example, if you booked FD of 10 lakh in September 2020 for 1 year with 7% of interest rates, in this case on 31st march financial year will be closed and your earned interest divided into 2 parts:

Earned interest= (10 Lakh * 7% * 12 months) = 72,290 INR

It will be divide into 2 parts: 72,290/2= 36145 INR

So the earned interest of 36145 INR is below the 40000 INR.

3) You can book FDs in different banks (not in different branches of the same banks). It helps to use the whole limit of 40k to avoid the TDS deduction as they will not be allowed to merge other banks earned interests to this limit.

 

Disclaimer: These are the details that our team accesses from different sources. For more information, you can visit a particular bank or their websites if they revise the rates or rules.

Also read: Know More About the Highest FD Interest Rates in 2020

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