Investing in fixed deposits – which not only allows you to save money but also enables you to make a sizable income on it – is one of the most preferred investment avenues of risk averse investors and senior citizens. Bank FD interest rates are competitive and aid the depositor in getting a decent return on investments over a set period of time without hurting the principal amount.
Interest rates on fixed deposits offered by banks vary depending on the amount, category of investors, and tenure.
When the term is up, the principal and accumulated interest are combined, and the depositor is given the sum total. Fixed deposits can be made for a period of time of seven days to ten years.
Here is a comparison of the FD offered by top 10 banks by size. We’ll look at the minimum and maximum FD interest rates offered, with tenures between 7 days to 10 years for amounts below Rs 2 crore. (Latest interest rates as on June 5, 2023, source: Bank websites.)
Latest FD interest rates of top 10 banks
| Bank FD | General Citizens | Senior Citizens |
| SBI | 3% to 7.10% | 3.50% to 7.60% |
| HDFC Bank | 3.00% to 7.25% | 3.50% to 7.75% |
| ICICI Bank | 3.00% to 7.10% | 3.50% to 7.60% |
| PNB | 3.50% to 7.25% | 4.00% to 7.75% |
| Axis Bank | 3.50% to 7.10% | 3.50% to 7.85% |
| Canara Bank | 4.00% to 7.25% | 4.00% to 7.75% |
| Kotak Mahindra Bank | 2.75% to 7.20% | 3.25% to 7.70% |
| Union Bank | 3% to 7% | 3.50% to 7.50% |
| Yes Bank | 3.25% to 7.50% | 3.75% to8.25% |
| Bank of Baroda | 3% to 7.25% | 3.50% to 7.55% |
Taxation on FD
Interest on FDs is classified as ‘income from other sources’ under the Income Tax Act of 1961 and is thus completely taxable. The interest profits on your FD are included in your gross annual income, and the tax liability is estimated in accordance with the applicable tax rules.
TDS (or tax deducted at source) will be deducted on FD interest if the interest exceeds Rs 40,000 (Rs.50,000 for Senior Citizens) in a fiscal year. If you have provided your PAN card details as a resident client, the interest deduction will be 10% per year. The bank will deduct 20% every year if you do not have a PAN card.
If your total income in a fiscal year is less than the minimum taxable amount, you will be exempt from taxation. TDS will not be deducted from FD interest. To qualify for tax exemption, you must file form 15H or 15G (depending on your age and income) with instructions to not deduct TDS. You can avoid TDS by submitting Form 15G declaring your ineligibility. Senior citizens have to submit Form 15H.
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