Investment Tips: If you are investing in FD or National Savings Certificate for 5 years, then know these things first...
You are planning a long-term investment of 5 years and are not able to understand which option is better Fixed Deposit and National Savings Certificate. If you understand the difference between these two options, it may become easier to make a decision.
Knowledge of interest and income tax rules regarding fixed deposits and National Savings Certificate is important. To understand the difference between the two investment options, here we are giving information about the rules related to interest rate, investment amount, and income tax.
NSC vs FD: interest rate
Currently, compounding interest is being given at the rate of 7.7% in the National Savings Certificate. On the other hand, banks like SBI, Post Office, and ICICI are offering 6.5% to 7.5% annual interest on 5-year fixed deposits.
NSC vs. FD: Investment amount
There is no limit on investment in the National Savings Certificate. Certificates of Rs 100, 500, 1000, 5000, 10,000 and more are available with the scheme. FD can be started from Rs 1000 in almost all major banks and post offices of the country.
NSC Vs FD: Income Tax Rules
Exemption under Section 80C of the Income Tax Act can be availed on investments up to Rs 1.5 lakh in National Savings Certificate and Fixed Deposit. If we try to understand the difference between the two investment options, we find that TDS is not deducted from the National Savings Certificate.
On the other hand, if the annual interest amount in the fixed deposit is more than Rs 40 thousand, then 10 percent TDS starts being deducted. However, in the case of senior citizens, this limit becomes Rs 50 thousand instead of Rs 40 thousand.
PC Social media