Tax saving Fixed Deposit Schemes

This is another option about which most of us might be unaware. Tax saver FD's are issued by banks for tenure of 5 years and premature withdrawal is not permissible. It yields interest income of 8% with quarterly compounding. The interest income is taxable. If we compare tax saving FD's to NSC, Tax saving FD's have an edge on lock in period which is lesser by one year.

Besides there are some pension plans also that are eligible for deduction under Sec 80C. If an individual invests smartly in these avenues, it will help in reaching to financial independence through maximum savings and least amount of tax payout.