 "Fixed Deposit, FD")
In September, 15 banks, including small finance banks, private, foreign, and public sector banks, are offering interest rates of 8% or higher. Some of the banks providing these rates include NorthEast Small Finance Bank, which offers a 9%, followed by Unity Small Finance Bank and RBL Bank, both providing rates of up to 9% and 8.10%, respectively. YES Bank and Deutsche Bank also feature on the list, with competitive rates of 8%. Take a look at which banks are offering these attractive rates this month.
Here are the 15 banks offering interest rates of 8% and more, according to Paisa Bazaar:
1. AU Small Finance Bank
Interest Rate: 8%
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Tenure: 18 months
2. Equitas Small Finance Bank
Interest Rate: 8.50%
Tenure: 444 days
3. ESAF Small Finance Bank
Interest Rate: 8.25%
Tenure: 2 years to less than 3 years
4. Jana Small Finance
Interest Rate: 8.25%
Tenure: 365 days to 1095 days
5. NorthEast Small Finance Bank
Interest Rate: 9%
Tenure: 546 days to 1111 days
6. Suryoday Small Finance Bank
Interest Rate: 8.65%
Tenure: 2 years 2 days
7. Ujjivan Small Finance Bank
Interest Rate: 8.25%
Tenure: 12 months
8. Unity Small Finance Bank
Interest Rate: 9%
Tenure: 1001 days
9. Utkarsh Small Finance Bank
Interest Rate: 8.50%
Tenure: 2 years to 3 years; 1500 days
10. Bandhan Bank
Interest Rate: 8%
Tenure: 1 year 9 months
11. DCB Bank
Interest Rate: 8.05%
Tenure: 19 months to 20 months
12. RBL Bank
Interest Rate: 8.10%
Tenure: 500 days
13. SBM Bank India
Interest Rate: 8.25%
Tenure: More than 18 months to less than 2 years 3 days
14. YES Bank
Interest Rate: 8%
Tenure: 18 months
15. Deutsche Bank
Interest Rate: 8%
Tenure: Above 1 year to 3 years
Four banks — Karnataka Bank, Bank of Baroda, City Union Bank, and Bank of India — recently adjusted their FD rates. According to the official websites of the banks, the revised rates available to the general public and senior citizens are:
1. Karnataka Bank
Karnataka Bank’s revised FD rates took effect on September 3, 2024, according to the updated data on its website. The bank offers interest rates between 3.50% and 7.50% for general citizens on deposits below Rs 3 crore. Senior citizens are offered rates from 3.75% to 8%, with the highest rates of 7.50% (for general citizens) and 8% (for senior citizens) available for a 375-day tenure.
2. Bank of Baroda
Bank of Baroda has revised its FD interest rates, applicable from September 5, 2024. The new rates for deposits under Rs 3 crore range from 4.25% to 7.30%, depending on the tenure, which can vary from 7 days to 10 years. These rates are for callable deposits, and are available to general citizens.
3. City Union Bank
City Union Bank has also updated its FD rates for deposits below Rs 3 crore, effective from September 1, 2024. General citizens can now earn between 5% and 7.50%, while senior citizens are offered rates ranging from 5% to 8%. For a tenure of 333 days, the highest rate is 7.50% for general depositors, and 8% for senior citizens. Super senior citizens receive a top rate of 8.10% on the same tenure.
4. Bank of India
As of September 1, 2024, Bank of India has introduced updated FD rates for deposits below Rs 3 crore. General citizens can now enjoy rates between 3% and 7.25% on tenures ranging from 7 days to 10 years. Additionally, the bank has introduced a new special FD scheme called Star Dhan Vriddhi, which offers an interest rate of 7.25% for general depositors. Senior citizens and super senior citizens can benefit from even higher rates of 7.75% and 7.90%, respectively.
How is FD taxed in India?
"In India, Fixed Deposits (FDs) are taxed based on the interest earned, not the principal amount. The interest is added to your total income and taxed according to your income tax slab. If the interest exceeds Rs 50,000 for senior citizens (Rs 40,000 for others), 10% TDS is deducted by the bank, which increases to 20% without a PAN," says Bank Bazaar.
Let's consider an example of Mr Sharma, a 66-year-old man, who earns Rs 75,000 annually as interest from a Fixed Deposit (FD).
TDS deduction: Since the interest exceeds Rs 50,000, the bank will deduct 10% TDS on the amount over Rs 50,000.
Total interest: Rs 75,000
Threshold for TDS (for senior citizens): Rs 50,000
Amount subject to TDS: Rs 75,000 - Rs 50,000 = Rs 25,000
TDS deducted by the bank: 10% of Rs 25,000 = Rs 2,500
Taxable income: The full Rs 75,000 interest will be added to Mr Sharma's total taxable income for the year. If his total income, including the FD interest, is below Rs 3 lakh (the exemption limit for senior citizens), he doesn't have to pay any additional tax.
If Mr Sharma’s total income is below Rs 3 lakh, he can submit Form 15H to the bank at the start of the financial year to avoid TDS deduction.
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