Fixed Deposits (FDs) can be invested in banks and post offices for a fixed period of time. Minimum 14 days Maximum 10 years. NSC National Savings Certificate can be invested only in Post Offices. Let’s see about this in detail..
What are the benefits of NSC over FD
FD stands for Fixed Deposit, which is a financial instrument offered by banks where individuals can deposit a lump sum of money for a fixed period of time at a fixed interest rate. The interest earned on FDs is generally higher than regular savings accounts.
NSC stands for National Savings Certificate, which is a savings scheme offered by the Indian government. It is a fixed-income investment with a fixed maturity period. NSCs are available in different denominations and can be purchased from post offices. The interest rate on NSCs is set by the government and is typically higher than regular savings accounts but lower than FDs.
In summary, the main differences between FD and NSC are,
1. Issuer: FDs are offered by banks, while NSCs are offered by the Indian government through post offices.
2. Investment Amount: FDs usually have a minimum deposit requirement, while NSCs are available in different denominations.
3. Interest Rates: FD interest rates are determined by banks, while NSC interest rates are set by the government.
4. Liquidity: FDs have a fixed tenure, and premature withdrawal may result in penalties. NSCs also have a fixed maturity period, but they can be encashed prematurely with some penalties.
5. Tax Benefits: The interest earned on FDs is taxable, while NSCs offer tax benefits under Section 80C of the Income Tax Act.
6. Availability: FDs are available at banks, while NSCs can be purchased from post offices.
80C tax exemption is available under the Income Tax Act which is valid only for a limited period (5 years and 10 years). You can invest according to your needs. Interest rates keep changing. Interest will be earned at the rate prevailing at the time of investment
