South Indian Bank - Tax Saving FD

The South Indian Bank Tax Saver FD (also known as the ‘Tax Gain Deposit 2006’) is a fixed deposit scheme with a 5-year lock-in period that offers tax benefits and fixed returns. You can invest up to ₹1.5 lakh annually in the FD with the entire amount being eligible for deduction under Section 80C. 

However, interest earned on the deposit is taxable as per your income tax slab. Additionally, the deposit also carries a mandatory 5-year lock-in period, during which you cannot make withdrawals. 

If you need tax saving benefits, along with steady and safe returns, you can consider the South Indian Bank Tax Saver FD. But before you book the FD, read this article to understand its key features, benefits, and interest rates.

Key Features of a South Indian Bank Tax Saver FD

Let’s have a look at the key features of the South Indian Bank Tax Saver FD to understand this FD scheme better:

Feature	Details
Tax Benefit	Investors can claim a deduction of up to ₹1.5 lakh under Section 80C on the invested sum.
Interest Rate	5.70% p.a. (for regular investors) 6.20% p.a. (for senior citizens)
Lock-in Period	5 years.
Premature Withdrawal	Not allowed.
Minimum Deposit	₹100. You can add more in multiples of ₹100.
Maximum Deposit	₹1,50,000 in a financial year.
Eligibility	Resident Individuals Karta of a Hindu Undivided Family (HUF) Joint Account (in the name of the first holder)
Loan/ Overdraft Facility	Not allowed.
Auto-Renewal	Not available. You must manually renew or withdraw after maturity.
Nomination Facility	Allowed (except if the deposit held by or on behalf of a minor).
Tax Treatment of Interest	Completely taxable.

Note: The details mentioned above are valid as of 26th September, 2025. 

What are South Indian Bank Tax Saver FD Rates 2025?

As of 26th September, 2025, the South Indian Bank Tax Saver FD rates are as follows:

FD Scheme	Tenure	Regular Citizens	Senior Citizens
South Indian Bank tax-saving FD	5 Years	5.70% p.a.	6.20% p.a.

How Does South Indian Bank Tax Saver FD Work?

To claim tax deductions on your South Indian Bank Tax Saving FD, you have to:

• Invest in the FD
• Claim a tax deduction u/s 80C
• Pay tax on your reduced income

Here’s how it works:

• Step I: Calculate your Gross Income

Add up income from all sources, including your salary income, business/professional income, rental income, capital gains, and all other income. 

• Step II: Invest in Tax Saver FD

Deposit an amount of up to ₹1.5 lakh into the South Indian Bank Tax Saving FD.

• Step III: Claim Deduction under Section 80C 

The invested amount needs to be subtracted from your ‘gross total income’ to arrive at your ‘net taxable income’. 

• Step IV: Pay Tax as per Slabs

Apply the relevant income tax slab rates on your net taxable income to ascertain your final income tax liability. 

So, let’s say, your gross total income is ₹10,00,000 and you invest ₹1,50,000 in a South Indian Bank Tax Saving FD. You apply the deduction u/s 80C. Post that, your taxable income comes to ₹8,50,000 (₹10,00,000 – ₹1,50,000). The income tax payable will be calculated on this ₹8,50,000, rather than ₹10,00,000.

TDS on South Indian Bank Tax Saver FD

While the principal you invest into a South Indian Bank FD qualifies for deductions u/s 80C, the interest doesn’t. Interest income is added to your total income for the year and taxed as per the applicable tax slab. 

To ensure adherence with tax laws, the bank deducts this as TDS (tax deducted at source) and pays it to the government. The following rules apply on TDS collection:

• The bank deducts TDS when interest income exceeds ₹50,000 for regular citizens and ₹1 Lakh for senior citizens in a financial year.
• If PAN is submitted, TDS is deducted at 10%. Without PAN, the rate is 20%.
• If the customer’s annual income is below the taxable limit, they can submit Form 15G (15H for seniors) as a self-declaration to avoid TDS deduction.

Who Can Consider Investing in South Indian Bank FD?

A South Indian Bank Tax Saver FD may be suitable for:

• Individuals who want to save tax under Section 80C while earning assured returns.
• Hindu Undivided Families (HUFs) aiming to grow collective wealth in a tax-efficient way.
• Investors who prefer safety and stability over high but risky returns.
• People without immediate liquidity concerns who are willing to lock in funds for 5 years to build disciplined long-term savings.

Want to Save Taxes & Earn Good Returns? Book Your FD with GoldenPi

South Indian Bank Tax Saver FD is a good investment option for anyone looking for a low-risk returns against tax benefits. If you don’t mind a 5-year lock-in, you can invest up to ₹1.5 lakh in this FD and get tax benefits on the same under Section 80C. All while enjoying interest at 5.70% p.a. (6.20% for seniors). 

Still looking for higher interest rates on tax saver FDs? Check the popular options available from Suryoday Small Finance Bank and Unity Small Finance Bank on GoldenPi.