5-year tax-saving fixed deposits (FDs) are not completely tax-free. While the principal investment of up to ₹1.5 lakh per year is deductible under Section 80C of the Income Tax Act, the interest earned is fully taxable according to your income tax slab rate. TDS is also deducted if interest exceeds ₹50,000 annually.
FAQs on 5 Year Tenure FD Rates
Yes, you can invest more than Rs. 1.5 lakh in a normal five -year fixed deposit plan. The maximum limit of Rs. 1.5 lakh is only for tax-saver FDs which also has a five year tenure which is also a lock-in period.
If your age is below 60 years, use Form 15G and if your age is 60 years or above, use Form 15H. By providing these forms to your bank, you ensure that TDS is not deducted, allowing you to receive your full FD interest without tax deductions provided your income remains within the exemption limit.
Are 5-year FDs tax-free? No, the interest earned on a 5-year FD is taxable. However, there are specific tax-saving FD schemes that offer tax benefits under Section 80C of the Income Tax Act.
It is required to add the interest you earn from FD's as your income under the head 'Income from other sources'. Make sure that you declare it while filling your income tax returns.
It's important to know that you cannot close your Tax Saver FD because it comes with a lock-in period of 5 years. It cannot be closed before the tenure of 5 years and there is no option for premature withdrawals.
Interest income on savings account
If you earn interest income of up to ₹10,000 from a savings account, you can claim a tax deduction under Section 80TTA of the IT Act. However, if this amount exceeds ₹10,000, it is taxable per applicable slab rates.
Q4. Is FD interest taxable every year or only on maturity? Interest earned on fixed deposits is taxable each financial year when it accrues, not only at the time of maturity. Even if the amount is not withdrawn, it must still be declared as income in that year's ITR.
Conclusion. Understanding the tax implications of NRI Fixed Deposits in India is crucial for effective financial management. While NRO Accounts are subject to a 30% TDS on interest income, NRE Accounts are tax-free. However, if your NRI status changes, NRE Accounts will be taxed as resident accounts.
It's important to know that you cannot close your Tax Saver FD because it comes with a lock-in period of 5 years. It cannot be closed before the tenure of 5 years and there is no option for premature withdrawals.
Yes, you can deposit Rs. 20 lakh across one or multiple FDs. But only Rs. 5 lakh per bank per depositor is insured by DICGC.
Conclusion. Understanding the tax implications of NRI Fixed Deposits in India is crucial for effective financial management. While NRO Accounts are subject to a 30% TDS on interest income, NRE Accounts are tax-free. However, if your NRI status changes, NRE Accounts will be taxed as resident accounts.
Your interest earnings depend on the tenure you choose and the FD rate. For example, the ₹2 Crore FD interest per month at 7% p.a. for a tenure of 5 years will be ₹1,16,666 with a total interest earning of ₹80.5 Lakhs.
To earn Rs. 50,000 per month from an FD, you need to consider the interest rate offered. For example, at an 8% annual interest rate, you'd need an FD of around Rs. 75 lakhs.
Now, let's solve for how long your Rs 2 crore corpus can fund a Rs 1 lakh monthly withdrawal, adjusted for inflation (i.e., the amount increases every year). The result? The Rs 2 crore corpus would run out in the 21st year. Basically, that's not enough if you retire at 60 and live till 85 or 90.
You can choose a wide range of tenures for a Corporate FD, typically from 7 days to 10 years or more. Some financial institutions may also allow more flexible terms if the investment amount is significant. Moreover, if you invest ₹100 crore, the financial institution will likely treat your investment as a bulk deposit.
Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
With the recent changes in the Indian Income Tax Act, it's now possible to pay zero tax on a salary of up to Rs. 7 lakhs. To pay zero tax on a 7 lakh salary using the old tax regime, maximize deductions: Claim Tax Rebate under Section 87A.
The FD vs stocks comparison highlights even starker differences in risk and return potential: Return potential: Stocks have historically delivered 12-15% annual returns over long periods compared to 6-8% for FDs. Volatility: Stock prices can fluctuate dramatically daily, while FD returns remain fixed.
For a tenure of 5 years, the ₹1 Crore FD interest per month can go up to approximately ₹66,666 at an interest of 8%, yielding ₹46.9 Lakhs as total interest earned.
The SBI Amrit Vrishti Scheme 2026 (also known as the SBI 444 Days FD) is a special fixed deposit product from State Bank of India offering a fixed tenure of 444 days with competitive interest rates. As of December 19, 2025, the scheme offers 6.45% p.a. to regular investors.