Worked example
Example with the default numbers — change them above.
Deposit amount: ₹1,50,000 · Interest rate (a year): 7% · Your income-tax slab: 20% · Claim the Section 80C deduction: Yes
A ₹1.5 L tax-saver FD at 7% grows to ₹2.12 L after 5 years. Under the old tax regime the deduction can save about ₹30,000 in tax, which lifts your return after tax to 10.73% a year.
| Maturity amount | ₹2.12 L · after the 5-year lock-in, before tax on interest |
|---|---|
| Interest earned | ₹62,217 · 41.5% of your deposit |
| Tax saved under 80C | ₹30,000 · ₹1,50,000 counts × 20% slab |
| Interest after tax | ₹49,773 · ₹12,443 tax at the 20% slab |
| Yearly return with 80C saving | 10.73% · 5.9% without the 80C saving |
How the Tax Saver FD Calculator works
- Enter the deposit amount, the interest rate your bank offers and your income-tax slab.
- The calculator grows the deposit for five years with interest added quarterly, the usual practice for tax-saver FDs.
- The deduction is the smaller of your deposit and the room left under the 80C limit after your other 80C investments. Tax saved is that amount times your slab rate.
- Interest is taxed at your slab rate, so the calculator subtracts that tax from the interest to show what you keep.
- Your yearly return after tax compares what you end up with against what the deposit really cost you after the tax saved.
Tax saved and return after tax
Tax saved = min(deposit, 80C room) × slab rate
Cost to you = deposit − tax saved
Money you end with = deposit + interest − tax on interest
Yearly return = (money you end with ÷ cost to you) ^ (1 ÷ 5) − 1Assumptions and limits
- Section 80C (now section 123 of the Income-tax Act, 2025) applies to the old tax regime only, and its yearly limit is shared with other 80C items. Rules change, so check current rules before relying on this page.
- Tax saved uses your slab rate only. The 4% cess, surcharge and any other deductions are not included, and the saving is counted in full on the day you deposit, though in practice it reaches you when you file your return or through lower TDS on salary.
- The deposit runs for exactly five years. Some banks offer tax-saver FDs of five to ten years; a longer one earns interest for longer.
- In a joint tax-saver FD only the first holder can claim the deduction.
- Interest is taxable every year as it accrues, even though a cumulative FD pays it at maturity. This page taxes the total at your slab rate and ignores TDS, which is only an advance.
- The five-year lock-in is fixed. Early withdrawal is usually not allowed, and the deposit cannot be used as security for a loan.
- The rate is yours to set. The 7% starting rate is a placeholder from this site's data file, not any bank's current offer.
Frequently asked questions
What is a tax saver FD?
A tax-saver FD is a bank fixed deposit with a five-year lock-in that can qualify for a deduction under section 123 of the Income-tax Act, 2025 (old Section 80C), within the yearly limit, if you use the old tax regime. The interest is taxable, and you usually cannot withdraw before five years. Banks and post offices offer them; rates differ.
How much tax can I save with a tax saver FD?
The saving is the deductible amount times your slab rate. With the ₹1.5 lakh yearly 80C limit, a 30% slab saves about ₹45,000 and a 20% slab about ₹30,000, before cess, if you have no other 80C investments. EPF, PPF, ELSS and insurance premiums share the same limit. Check current rules, then use the calculator for your own numbers.
Is tax saver FD interest taxable?
Yes. The interest is added to your income and taxed at your slab rate every year as it accrues, even if the bank pays it only at maturity. Banks deduct TDS once interest crosses a yearly limit (10% with your PAN, 20% without), but TDS is only an advance. The deduction on the deposit does not make the interest tax-free.
Can I withdraw a tax saver FD before 5 years?
Generally no. Tax-saver FDs have a fixed five-year lock-in, and most banks do not allow premature withdrawal or loans against them. Exceptions are rare, such as the death of the depositor, and depend on the bank's terms. Only deposit money you will not need for five years.
Tax saver FD vs PPF vs ELSS: how do they differ?
All three can qualify for Section 80C (now section 123). A tax-saver FD has a five-year lock-in, a rate fixed at opening and taxable interest. PPF locks in for 15 years with tax-free interest at a government-notified rate. ELSS equity funds lock in for three years but returns are market-linked and not guaranteed. The right mix depends on your goals and risk comfort.
Does a tax saver FD help under the new tax regime?
Under the new tax regime the Section 80C deduction is generally not available, so a tax-saver FD gives no deduction and works like any five-year FD with interest taxed at your slab. Rules and options change, so check the current ones. Switch off the deduction option above to see the result without tax saving.
Sources
- Income Tax Department: Income-tax Act, 2025, section 123 – ₹1.5 lakh deduction for specified savings (old section 80C)
- Income Tax Department: Income-tax Act, 2025, Schedule XV – investments that qualify under section 123
- Income Tax Department: Income-tax Act, 2025, section 393 – TDS on interest (old section 194A)
- DICGC (RBI subsidiary): deposit insurance of up to ₹5 lakh per depositor per bank
Logic and rates last verified on .
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