Tax saver FD
A bank fixed deposit locked for 5 years whose deposit counts towards the 1.5 lakh rupee deduction on the old regime.
A tax saver FD is a 5-year fixed deposit that lowers your taxable income on the old regime, in exchange for no early exit. The interest is still taxed. Read the rules and a worked example in tax saver FD: a fixed deposit that cuts your tax.
Questions people ask
What is a tax saver FD?
A fixed deposit with a 5-year lock-in. Up to 1.5 lakh rupees a year deposited in it counts towards the deduction long known as section 80C, now section 123 of the Income-tax Act, 2025, on the old regime only.
Is tax saver FD interest tax-free?
No. The deposit is deductible, but the interest is taxed at your slab every year, and TDS applies once your interest from the bank crosses the yearly limit.
Can I withdraw a tax saver FD before 5 years?
No. It cannot be closed early, and you cannot take a loan against it.
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