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What is the ICICI Tax Saver FD?

The ICICI Tax Saver FD is a fixed deposit that qualifies for tax benefits under Section 80C of the Income Tax Act of 1961. You can claim up to Rs 1.5 lakh in deductions if you invest in a Tax Saver FD in a given financial year. The interest rates on Tax Saver FDs are fixed for the whole five-year term. Tax Saver FDs, like other FDs, offer a variable interest pay-out option, with payments made monthly, quarterly, or on a regular basis. Senior citizens are given preferential interest rates.

ICICI Tax Saver FD Interest Rate 2024

Type of DepositorRate of Interest
Individuals (Less than 60 years of age)3% – 7.2%
Senior Citizens3.5% – 7.75%

Features of ICICI Tax Saver FD

  • A minimum lock-in period of 5 years. Unlike other fixed deposits, you cannot prematurely withdraw before the lock-in period.
  • The minimum deposit amount is Rs 10,000. Moreover, the maximum amount is Rs 1.5 lakhs in a financial year.
  • A tax deduction under section 80C of up to Rs 1.5 lakhs of the Income Tax Act, 1961
  • The interest income is chargeable to tax in the hands of the depositor. 
  • You can make a lump-sum one deposit only in the ICICI Tax Saver FD
  • Auto-renewal of investment in fixed deposit available. You need to select the maturity instructions at the time of deposit of the initial deposit amount.
  • The fixed deposit account can be opened by an individual in his or her name or jointly with another individual. 
  • In the case of a joint account, the tax benefit is available to the primary account holder. The fixed deposit receipt will be available to both the account holders. The maturity amount will be payable to both the account holders or either of the surviving account holders.
  • Nomination facility is available to the depositor. 
  • A loan or overdraft facility on ICICI Tax Saver FD is not available on a tax saver fixed deposit
  • The tax saver FD provides flexible interest payout. You can opt for an interest payout option of monthly, quarterly or reinvestment in principal. Reinvestment in the principal is recommended if you do not need the cash inflow. This is because due to reinvestment and the power of compounding you can earn more.

Eligibility for ICICI Tax Saver Fixed Deposit

Every individual who is a resident in India including a senior citizen and a Hindu Undivided Family (HUF) can invest in the ICICI Tax Saver FD.

Benefits of Investing in the ICICI Tax Saver FD

  • Begin small : You can begin investing with a minimum of Rs 10,000 as a new investor.
  • Guaranteed profits : Unlike riskier financial products, whose earnings are based on market conditions, you can receive predictable and reliable returns at a competitive interest rate.
  • Tax benefit : Under Section 80C, you are allowed to claim tax deductions of up to Rs 1.5 lakh.
  • Facility for nominations : Whether the account is owned solely or jointly, you can name a nominee by filling out a document required by the Banking Companies Act.
  • Smallest lock-in period : This FD has one of the shortest lock-in periods, at only five years, during which you are not permitted to withdraw funds prematurely.

Who Should Invest in ICICI Tax Saving Fixed Deposit?

The ICICI Tax Saving FD is a fixed deposit coupled with tax savings. However, tax saving must not be the only factor for you to consider while investing. Tax saver FD is more suitable for an investor who is looking for an assured rate of interest, lower risk, long term investment, and tax saving. There are other tax saving investment options as well like PPF, post office term deposit, NSC, NPS, and so on. Like tax saver FD, these investments provide assured return, the lower risk involved, and tax saving. If you understand risk and volatility with exposure to equities then ELSS is a more suitable investment option. The equity linked savings schemes are exposed to equities with a lock-in period of just 3 years. 

How to Invest in the ICICI Tax Saving Fixed Deposit?

You can invest in ICICI Tax Saving FD either through online internet banking or offline. You can invest online by logging into your internet banking account. You need to fill in the details in the application form and submit it. The deposit amount will be automatically deducted from the associated savings bank account. The online method is preferable because the bank already has your documents and updated KYC. Hence, you need not submit any document. 

In the offline mode, you need to visit the nearest branch of ICICI bank. You must fill out the application form and submit it along with the documents. These documents include your PAN, address proof such as Aadhaar or Voter ID, and a passport size photograph. 

Tax on ICICI Tax Saving Fixed Deposit

  • Interest income is taxable under the heading “other sources of income.” 
  • The interest will be added to the gross total income earned by the depositor during the financial income. It is taxed at the investor’s applicable slab rate for the financial year.
  • During the financial year, TDS Certificates will be mailed at the end of each quarter. The amount of TDS deducted and interest income is detailed on the TDS certificate.
  • When a customer’s total interest due or reinvested on FDs and RDs across all branches exceeds Rs 40,000, TDS is deducted. This is Rs. 50,000 each financial year for senior citizens.
  • According to section 206AA, every person who gets income on which TDS is deductible must provide his or her PAN. If the depositor fails to furnish the PAN then TDS will be taken at a rate of 20% instead of the current rate. If your PAN is not updated with the Bank or is incorrect then as well bank will deduct TDS at 20%

Recommended Read: Tax on FD Interest

Lower or NIL Deduction of TDS on FD Interest

  • The Income Tax Act, 1961 provides for a nil deduction of TDS in the case of a resident of India. Here, the taxpayer must submit either Form 15G or Form 15H as applicable.
  • Form 15G or Form 15H is a declaration by the depositor that the tax on the estimated total income for the financial year is NIL. 
  • A mandatory requirement of the forms is that depositors must quote their PAN. If the depositor quotes an incorrect or invalid PAN then it is deemed that the forms were never submitted.
  • Investors must send Form 15G or Form 15H to the bank in triplicate. One copy will be submitted to the IT department. The second copy will be deposited in the bank’s records. The third will be available to the customer with a Branch seal as an acknowledgement.
  • Form 15G or Form 15H must be submitted every financial year.
  • It must be submitted before the payout or accrual of the interest income. 

Frequently Asked Questions

What is the frequency with which I will earn interest on my FD?

The frequency of interest is determined by the FD plan. Interest is paid at maturity along with the principal amount in a re-investment plan. Further, interest is paid monthly, quarterly, or occasionally in a traditional FD, depending on the customer’s preference.

Will I receive a Tax Saver Deposit receipt?

For FDs opened using alternate channels such as Internet Banking, iMobile app, Customer Care, and so on, a printable receipt will be available one working day after the account is opened. Over the counter collection is available for FDs opened at branches. The FD receipt will be emailed to your registered e-mail address as well as mailed to your registered mailing address.

What happens upon maturity of tax saver FD?

On maturity of the tax saver FD, the principal amount and interest earned is credited to your associated savings bank account.

What is the tax saver FD investment limit?

The minimum investment amount is Rs 10,000. The tax saver FD investment maximum limit is Rs 1.5 lakhs per financial year.

At what frequency will I receive interest on my Tax Saving FD?

The interest on the Fixed Deposit (FD) account is credited to the Savings account designated by you on a monthly or quarterly basis under the Traditional plan. Interest is compounded weekly to the principal amount in the Reinvestment plan but only credited in FDs at maturity.

What is the tenure of a tax saver FD?

The tenure of a tax saver FD is 5 years from the date of the deposit of the principal amount.

Can I get a loan against the ICICI Tax Saving FD?

No, you cannot get a loan against the ICICI Tax Saving FD as per the Banking Regulations.

Do Senior citizens get any extra benefit on the Tax-Saver FD?

Yes, the Senior citizens get any extra benefit on the Tax-Saver FD. The interest rate is 0.50% higher in comparison to the interest rate for other individuals.

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