If you want to take advantage of tax saving with safe investment, then Post Office 5-Year Time Deposit (TD) and tax-saving fixed deposits (FD) of banks can prove to be good options for you, but both these schemes are different in many ways, such as returns, liquidity, taxation, and interest rates. Let us know which option will be better for you and which will benefit you more.

Post Office 5-Year Time Deposit (TD) Account

This is a savings scheme launched by the government, which gives a fixed interest rate of 7.5% (for January-March 2025). However, once you invest in it, the interest rate remains stable for the entire tenure.

Know the tax benefits too.

This scheme is eligible for tax deduction under Section 80C. Also, TDS is applicable on the interest earned in this scheme and you have to include it in the tax return under "Income from other sources". In this, a deduction is available under 80C on investing a minimum of ₹ 1000 and a maximum of ₹ 1.5 lakh. Tax exemption is available only on 5-year deposits. If you make deposits for a period of 1, 2, and 3 years, this facility is not available.

Tax-saving FD

The tax-saving FD offered by banks has a lock-in period of 5 years. However, the interest rates may vary according to different banks, SBI gives 6.5 percent interest, while HDFC and ICICI will give you 7 percent interest. At the same time, most banks give an additional interest of about 0.5 percent to senior citizens.

Know the tax benefits too.