FD vs NSC: Which Is the Better Choice for a 5-Year Investment?
When it comes to investing money, most people look for two things, safety and good returns. Fortunately, there are several options that offer both. If you are planning a 5-year investment, two popular choices are Bank Fixed Deposits (FDs) and the National Savings Certificate (NSC). Both are considered secure and also provide tax benefits. Let’s understand how they work and which option may suit you better.
Bank Fixed Deposits: A Trusted Investment
Bank Fixed Deposits (FDs) are among the most widely used investment options in India. Almost every bank offers FD schemes with different interest rates and tenures.
For a 5-year FD, banks usually offer interest rates between 5.5% and 7.75%, depending on the bank. If you choose a tax-saving FD, the investment qualifies for deductions under Section 80C of the Income Tax Act, allowing you to claim tax benefits of up to ₹1.5 lakh per year. This limit also includes other instruments like PPF, EPF, and NPS.
Important Tax Rules for FDs
Interest earned from FDs is taxable. Banks deduct TDS (Tax Deducted at Source) based on your income tax slab.
However, if your total income is below the taxable limit, you can avoid TDS by submitting Form 15G or Form 15H to the bank.
Bank Fixed Deposits: A Trusted Investment
Bank Fixed Deposits (FDs) are among the most widely used investment options in India. Almost every bank offers FD schemes with different interest rates and tenures. For a 5-year FD, banks usually offer interest rates between 5.5% and 7.75%, depending on the bank. If you choose a tax-saving FD, the investment qualifies for deductions under Section 80C of the Income Tax Act, allowing you to claim tax benefits of up to ₹1.5 lakh per year. This limit also includes other instruments like PPF, EPF, and NPS.
Important Tax Rules for FDs
Interest earned from FDs is taxable. Banks deduct TDS (Tax Deducted at Source) based on your income tax slab. However, if your total income is below the taxable limit, you can avoid TDS by submitting Form 15G or Form 15H to the bank.
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