Every year, as tax season approaches, most people rush to find ways to save tax. What many don’t realize is that your regular bank investments can help you reduce your taxable income — while simultaneously growing your wealth.

Let’s look at the smart ways you can use banking products to legally and efficiently save tax under the Indian Income Tax Act.

1. Tax-Saving Fixed Deposits (FDs)

A Tax-Saving Fixed Deposit is one of the most straightforward ways to reduce taxable income.
Here’s how it works:

• Eligibility: Individual or HUF (Hindu Undivided Family).
• Lock-in period: 5 years (cannot be withdrawn early).
• Tax benefit: Up to ₹1.5 lakh deduction under Section 80C.
• Interest: Fully taxable as per your income tax slab.

? Tip: Invest towards the end of the financial year to maximize returns while meeting the 80C limit.

2. 5-Year Recurring Deposits (RDs)

While RDs themselves don’t provide tax benefits, they help you systematically save for your tax-saving goals.
Example: You can set up an RD to build funds for ELSS or PPF investments before the year-end.

3. Public Provident Fund (PPF)

The PPF account remains one of the most reliable tax-saving tools. It combines guaranteed returns with tax-free maturity.

• Tax benefit: Deduction up to ₹1.5 lakh under Section 80C.
• Lock-in: 15 years (with partial withdrawal allowed after 6 years).
• Returns: Announced quarterly by the government, currently around 7–8% p.a.
• Tax-free: Both interest and maturity amount are completely tax-exempt under Section 10(11).

? Pro tip: Open your PPF in the first week of April to enjoy interest benefits for the entire financial year.

4. National Pension System (NPS)

The NPS is an excellent option for long-term retirement planning.

• Section 80C deduction: Up to ₹1.5 lakh.
• Extra benefit: Additional ₹50,000 deduction under Section 80CCD(1B).
• Returns: Market-linked (average 8–10% p.a.).
• Flexibility: Choose between equity and debt allocation.

? Tip: Even if you’ve exhausted your 80C limit, NPS gives you an extra ₹50,000 tax-saving window.

5. Equity-Linked Savings Scheme (ELSS)

Though offered through mutual funds, most banks distribute ELSS products through their investment desks.
These are ideal for those seeking tax benefits + long-term wealth creation.

• Lock-in: 3 years (shortest among 80C options).
• Returns: Market-linked, historically 10–14% p.a.
• Tax: Gains above ₹1 lakh in a year taxed at 10% (LTCG).

? Why ELSS? It’s perfect for salaried individuals looking to beat inflation and build wealth while saving tax.

6. Health Insurance Premiums (via Bank)

Many banks offer tie-ups with insurance partners. Premiums paid through your bank for health insurance can qualify for deductions under Section 80D:

? Tip: Paying your parents’ health insurance through your bank account gives you double tax benefits.

7. Home Loan from Bank

If you have a home loan, you can claim:

• Principal Repayment: Up to ₹1.5 lakh under Section 80C.
• Interest Paid: Up to ₹2 lakh under Section 24(b) for self-occupied homes.
• Additional Deduction: ₹1.5 lakh under Section 80EEA for affordable housing.

? Tip: Ensure you get the interest certificate from your bank for smooth tax filing.

8. Term Deposits & Senior Citizen Savings Schemes (SCSS)

For those above 60, the SCSS offers:

• Tax benefit: Up to ₹1.5 lakh under Section 80C.
• Interest: Around 8.2% p.a. (taxable).
• Tenure: 5 years (extendable by 3 years).

It’s one of the best low-risk instruments with regular payouts for retirees.

9. Bank-Linked Investment Accounts

Many banks offer investment accounts that bundle mutual funds, SIPs, and insurance products under one umbrella.
Tracking them through a single dashboard helps you optimize returns while ensuring tax efficiency.

10. Final Thoughts

Saving tax through your bank isn’t just about reducing liability — it’s about building a long-term financial plan.
Start early, diversify across tax-saving products, and use your bank as a one-stop platform for investment, savings, and tax efficiency.