New Delhi, Jan. 12 -- Tax-saving fixed deposits (FDs) are among the savings options that offer income tax benefits under Section 80C . Normally, tax saver deposits are of two types- 'Single holder type deposits' and 'Joint holder type deposits'. In case of a joint account, tax benefit will be availed by first holder of the deposit as per the Income Tax Act, 1961. An investor can claim deduction up to Rs 1.5 lakh by investing in tax-saving FDs. To save tax, many prefer this investment as they are considered to be less risky compared to equities.

Recently, many banks, including SBI, PNB, HDFC Bank and ICICI Bank, have hiked their fixed deposit rates, including those on tax-saving FDs. These tax-saving FDs have a lock-in period of five year...