Tax-Saving FDs vs. NSC: Key Factors for Your Investment Decision

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Tax-Saving FDs vs. NSC: Which Investment Wins for Section 80C?

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M

Moneycontrol•20-03-2026, 14:26

Tax-Saving FDs vs. NSC: Which Investment Wins for Section 80C?

•Both tax-saving FDs and National Savings Certificates (NSC) offer Section 80C benefits with a five-year lock-in and fixed returns.
•Tax-saving FDs: Interest is fully taxable annually as per income slab, even if not received, and banks may deduct TDS.
•NSC: Interest compounds internally, and annual interest (except final year) can be re-claimed under Section 80C, offering a tax advantage.
•While returns are similar, NSC often provides a better post-tax outcome, especially for higher tax brackets, due to deferred tax on interest.
•Both options lack flexibility for early withdrawals, making them suitable only if funds are not needed for five years.

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