Tax saver FDs provides you with dual benefits of tax exemption u/s 80C of the Income Tax and higher and safe returns on your investments.

The tax saver fixed deposit is locked in for the tenure of 5 years. The amount can't be used or pledged for any purpose.

TDS is applicable on the interest income which exceeds Rs 10,000 in a financial year. Banks are required to deduct 10 per cent as TDS. Make sure you update the PAN in your account or else 20 per cent TDS is applicable in such cases.

One can also apply for exemption on TDS if total income does not fall within the taxable limit. This can be done by submitting the form as per Income Tax Act.

Here are 5 best tax saving fixed deposits for 2016

1) Bandhan bank

Individual can park savings into the Tax Saver Fixed Deposit and enjoy high rate of interest. For regular citizen the bank offers interest rate at 8 per cent and for senior citizen it is 8.50 per cent.

2) DCB Bank

For regular citizen the bank offers interest rate at 8 per cent and for senior citizen it is 8.50 per cent.

3) Lakshmi Vilas Bank

To both regular and senior citizens, the bank offers an interest rate of 7.80% per annum.

4) Tamilnad Mercantile Bank Ltd

For regular citizen the bank offers interest rate at 7.80 per cent and for senior citizen it is 8.30 per cent.

5) The Ratnakar Bank

For regular citizen the bank offers interest rate at 8.75 per cent and for senior citizen it is 9.25 per cent.

Interest rates from other banks

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