SBI 5-year FD vs Top ELSS fund in 5 years: Taxpayers following the old tax regime will soon be looking for tax saving options as they need to submit necessary tax saving documents before March 31 next year.

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There are market-linked and non-market-linked tax saving instruments, where investors can deposit a lump sum amount and get tax benefits.

To get tax benefits, they don't need to withdraw the amount before the maturity period.

In this write-up, know some of the features of a tax saver FD and ELSS funds, and how a Rs 5 lakh investment in each of them, SBI 5-year FD and top ELSS mutual fund in terms of CAGR, has grown to in 5 years. 

What is a tax saver FD?

A tax saver FD has an investment duration of at least 5 years.

An investor following the old tax regime can benefit from deposits up to Rs 1.50 lakh in a financial year in a 5-year FD.

E.g., if a person invests Rs 5 lakh in a 5-year FD and makes no other investment that comes under Section 80C of the Income Tax, they can get tax relaxation of Rs 1.50 lakh in a financial year. 

Like many other banks, State Bank of India (SBI) also offers a 5-year FD, deposits in which can provide tax benefits.  

What are ELSS mutual funds?

ELSS is the only mutual fund category where deposits provide tax benefits under Section 80C.

The mutual fund category has a lock-in period of 3 years.

ELSS are popular among taxpayers as not only do they work as a tax-saving instrument, but they can also give good returns for their high exposure to large cap stocks.

Interest rate for general citizens in SBI 5-year tax saver FD

General citizens are getting 6.50 per cent interest rate in the 5-year SBI FD.

Interest rate for senior citizens in SBI 5-year tax saver FD

The tax saver FD offers an interest rate of 7.50 per cent to senior citizens. 

Interest rate for general citizens in SBI 5-year tax saver FD in November 2019

General citizens were getting 6.25 per cent interest rate in the 5-year SBI FD 5 years ago.

Interest rate for senior citizens in SBI 5-year tax saver FD

The tax saver FD was offering an interest rate of 6.75 per cent to senior citizens in November 2019. 

Top ELSS mutual fund in 5 years

Quant ELSS Tax Saver Fund - Direct Plan has given the highest annualised return to its investors in the 5-year period. 

The fund has provided 32.13 per cent annualised return to its investor in the 5-year period.

Current value of Rs 5 lakh investment made in SBI tax saver FD 5 years ago (general citizens)

The current value of Rs 5 lakh investment for general citizens is Rs 6,81,770.

Current value of Rs 5 lakh investment made in SBI tax saver FD 5 years ago (general citizens)

The current value of Rs 5 lakh investment for senior citizens is Rs 6,98,749.

Current value of Rs 5 lakh investment made in Quant ELSS Tax Saver Fund - Direct Plan 5 years ago (general citizens)

The top ELSS mutual fund has converted Rs 5 lakh lump sum investment into Rs 20,13,618.44 in the 5-year period.