FD vs NSC

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Investors seeking secure and government-backed investment options often consider fixed deposits (FD) and national savings certificate (NSC) as viable choices. Both instruments come with distinct features and offer a balance between safety and returns.

Hence, it is most crucial to understand the characteristics of fixed deposits and national savings certificates. This can help you make informed decisions based on your financial goals and preferences.

Comparative Analysis of Fixed Deposits vs NSC

Here’s a comparison between FDs and NSC to help you make an informed decision:

Features	Fixed Deposit (FD)	National Savings Certificates (NSC)
General	Offered by banks, post offices and NBFCs/HFCs	Issued by the Government of India
Tenor	7 days to 10 years; Tax-saver FDs have a 5-year lock-in period	5 years or 10 years, depending on the certificate type
Rate of Interest	Interest rates vary across banks and NBFCs	7.70% p.a. (October - December quarter, 2023)
Taxation	Interest earned on FDs are considered income and are liable for taxation as per the individual’s income tax slab	Interest earned is taxed at the time of maturity
Tax Benefits	Tax-saver FDs allow for benefits of up to ₹1.50 Lakhs u/s 80C of the I-T Act	Deductions of up to ₹1.50 Lakhs under Section 80C
Tax Deducted at Source (TDS)	10% if the interest earnings exceeds ₹50,000 for senior citizens and ₹40,000 for regular citizens 10% if interest income exceeds ₹5,000 (applicable to NBFC FDs) 20% if investor fails to submit his/her PAN information with the issuer	No TDS is deducted
Safety	Insured for up to ₹5 Lakhs insured by Deposit Insurance and Credit Guarantee Corporation (DICGC) in case of bank FDs	Issued by the Government of India and considered one of the safest investment option as they carry the sovereign guarantee
Risk	While the fixed interest rates at the time of investment provides certainty, investors may miss out on potential higher returns if market interest rates rise during the tenor	Less exposed to market risk. However, may face inflation risk as returns are predetermined.

The choice between FDs and NSC depends on individual financial goals, risk tolerance, and preferences. FDs offer a secure avenue with guaranteed returns and flexibility in tenor This makes it a great option for conservative investors who are looking for stability.

On the other hand, NSCs, backed by the government, provide a tax-saving option with a fixed interest rate, This makes them appealing for those looking for a combination of safety and tax benefits.

As with any investment decision, it is advisable to carefully consider one's financial objectives, risk appetite, and the prevailing economic conditions. Ultimately, both FDs and NSC serve as valuable tools in a diversified investment portfolio, catering to different preferences and financial objectives.

Fixed Deposit and Other Investment Comparisons
Bonds Vs FD	FD Vs RD	NPS Vs FD
Certificate Of Deposit Vs Fixed Deposit	FD Vs Real Estate	PPF Vs FD
Corporate FD Vs Bank FD	Fixed Deposit Vs Life Insurance	Short Term FD Vs Long Term FD
Cumulative Vs Non Cumulative FD	Fixed Deposit Vs Savings Account	SIP Vs FD
Debt Funds Vs FD	Liquid Fund Vs FD	Sukanya Samriddhi Yojana Vs FD
ELSS Vs FD	MIS Vs FD	Time Deposit Vs Fixed Deposit
Equity Vs Fixed Deposit

Disclaimer

The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort.

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products.

What is NSC?

National Savings Certificate (NSC) is an investment option launched by the government to encourage Indian citizens to save. It is a part of the India Post’s postal savings scheme.

How to invest in NSC online?

You can now invest in NSC online through the electronic mode (e-mode) provided by the government. All you need is a savings account with India Post and access to internet banking. You can invest in it for yourself, on behalf of a minor, or with another adult as a joint account.

Can I get tax benefits by purchasing NSC?

NSC is exempt from income tax under Section 80C of the Income Tax Act, 1961. Thus, you get a tax benefit of up to ₹1.5 Lakhs each financial year.

Is the NSC interest rate fixed for 5 years?

Yes, the rate of interest for NSC is fixed for five years.

Is NSC a safe investment?

NSC is considered to be a safe investment option. The principal amount is safe, and you get guaranteed returns regardless of market volatility.

Can I get a loan using NSCs?

Yes, it is possible to take a loan using your NSC as collateral..

Can I close an NSC before maturity?

NSCs have a fixed lock-in period, and you cannot close an NSC before maturity. The only exceptions include the investor's demise, a court order for withdrawal, or forfeiture of the certificate.

Is NSC better than FD?

Whether NSC or FD is ‘better’ depends on your priorities. Both offer tax benefits and guaranteed returns, but with key differences.

NSC: Tax-free returns up to ₹1.50 Lakhs annually but no premature withdrawals are allowed
FD: Flexible tenors ranging from 7 days to 10 years but tax-saver FDs have a lock-in period of 5 years