FD Vs NSC: National Savings Certificate or 5-year FD? Which will give you more returns on Rs 2 lakh investment?

FD Vs NSC Post Office Schemes: If you are looking for a scheme in which you get good interest and also save your tax, you can get these benefits in post office schemes. Like banks, many types of schemes are run by the post office too, in which, one can get guaranteed returns at a good interest rate.

For better interest rates and tax benefits, you can invest in post office's 5-year fixed deposit scheme (Post Office FD). This is known as Post Office Time Deposit. The 5-year post office FD is called tax saving FD.

Apart from Post Office FD, you also have a good option to invest in National Savings Certificate (NSC).

In this also, you can avail good interest and tax exemption. At present, the 5-year post office FD offers an annual interest of 7.5 per cent.

Whereas in NSC, a 7.7 per cent annual interest is available.

Let us tell you that if you are investing Rs 2,00,000, how much return will you get in a 5-year FD and the 5-year NSC.

Returns on Post Office FD and NSC

If you invest Rs 2,00,000 in a post office FD, on calculation based on the interest rate of 7.5 per cent, you will get Rs 89,990 as interest on it. In this way, your maturity amount will be Rs 2,89,990.

If you invest Rs 2,00,000 in an NSC of Post Office, you will get interest of Rs 89,807 on it in five years at the rate of 7.7 per cent. In this way, you will get a total of Rs 2,89,807 on maturity.

Why low returns on NSC despite high interest?

If you look at calculations here, you will see a slight difference in the returns of both.

But one thing to be noted is that despite the high interest rate available in NSC, the returns are low, whereas on FD, despite the low interest rate, high returns are being given.

The reason for this is that in Post Office FD, interest is calculated on quarterly basis, and in NSC, it is calculated on annual basis.
 

Tax benefits

One gets tax benefits on deposits up to Rs 1.50 lakh in a financial year in the 5-year post office and 5-year NSC under Section 80C of the Income Tax Act.