NSC vs FD: Regarding safe investments, National Savings Certificates (NSC) and Fixed Deposits (FD) are two of India’s most popular guaranteed return schemes. But if you’re wondering which scheme offers the highest maturity value for your investment, especially over a 5-year term, you’re not alone.
This blog, “NSC vs FD,” will compare the two, exploring their key differences, maturity calculations, and expected returns for different investment amounts. Let’s see which one stands out when it comes to returns!
1. What is NSC, and How Does It Work?
The National Investment Funds Certificate (NSC) is a government-backed venture plot advertising settled returns over a specified term. NSC has a residency of 5 or 10 years, and interest is compounded yearly but paid at development. It is a fabulous alternative for risk-averse financial specialists looking for assured returns.
Key Features of NSC:
- Tenure: 5 and 10 years
- Interest: 7.0% p.a. (current rates as of 2025)
- Tax benefits: Under Section 80C of the Income Tax Act Learn more about tax savings here
- Interest is taxable. See tax rules here
Learn more about NSC’s benefits here.
2. What is FD, and How Does It Work?
Fixed Deposits (FDs) are another popular, low-risk investment scheme offered by banks and financial institutions. With FDs, you invest a lump sum at an agreed-upon interest rate for a fixed period and receive returns at regular intervals or maturity. FDs are widely accessible and come with a flexible range of tenures.
Key Features of FDs:
- Tenure: 7 days to 10 years
- Interest: 6.5% – 7.5% p.a. (depending on bank and term)
- Taxation: Interest is taxable, but you can avail of tax-saving FDs with a 5-year lock-in. Learn more about FD tax benefits
- Risk: Very low; DICGC are insured. Learn more about DICGC.
Read more on how FDs work here
3. Comparison of Maturity Returns: NSC vs FD (Rs 3L, Rs 5L, Rs 7L, Rs 10L)
Let’s break down the returns for Rs 3,00,000 to Rs 10,00,000 investments in NSC and FD over 5 years.
1. NSC Returns on Rs 3,00,000 to Rs 10,00,000:
Investment Amount Interest Rate 5-Year Maturity (Approx.)
| Principal Amount | @ of Interest | Matured Amount (Approx) |
| 3,00,000 | 7.7% | 4,34,710 |
| 5,00,000 | 7.7% | 7,24,517 |
| 7,00,000 | 7.7% | 10,14,324 |
| 10,00,000 | 7.7% | 14,49,034 |
To calculate your NSC maturity accurately, you can use an online NSC calculator here
2. FD Returns on Rs 3,00,000 to Rs 10,00,000:
Investment Amount Interest Rate 5-Year Maturity (Approx.)
| Principal Amount | @ of Interest | Matured Amount (Approx) |
| 3,00,000 | 7.0% | 4,24,433 |
| 5,00,000 | 7.0% | 7,07,389 |
| 7,00,000 | 7.0% | 9,90,345 |
| 10,00,000 | 7.0% | 14,14,778 |
To calculate your FD maturity accurately, you can use an online FD calculator here
4. Tax Considerations: How NSC vs FD Differ
Both NSC and FD offer tax benefits under certain conditions, but they also have tax liabilities that must considered when calculating overall returns.
NSC Taxation:
- NSC interest is taxable under the Income Tax Act.
- A National Saving Certificate (NSC) qualifies for tax deduction under Section 80C, up to Rs 1.5 lakh. here.
- Interest is reinvested and taxed annually as per your income tax slab.
FD Taxation:
- FD interest is also taxable, but TDS (Tax Deducted at Source) applies if the interest earned exceeds Rs 40,000 (Rs 50,000 for senior citizens).
- You can claim a tax deduction under Section 80C for tax-saving FDs with a 5-year lock-in period. More about TDS here.
For a deeper dive into how FD interest is taxed, visit this guide
Also Read – 10 Hidden Tax Deductions: Can Save You Big!
5. Which is Better for You: NSC vs FD?
The choice between NSC and FD depends on a few variables, such as your venture objectives, charge arranging, and the time outline for your speculations. NSC may be superior if you center on tax-saving benefits and ensured returns. On the other hand, if you’re looking for adaptability with higher intrigue rates, an FD might suit you better.
Read more on choosing the right investment here
FAQs on NSC vs FD:
Q1. What is the maturity amount for Rs 5,00,000 in NSC?
A1. At an interest rate of 7% p.a., Rs 5,00,000 will grow to approximately Rs 7,00,000 after 5 years in NSC.
Q2. Is NSC a better option than FD?
A2. NSC offers higher returns (7% p.a.) than FDs, which offer 6.5%- 7% p.a., but it has tax liabilities on the interest.
Q3. Can I withdraw before maturity in NSC?
A3. No, NSC has a lock-in period of 5 years. Early withdrawal is not allowed, except in extreme cases like death. NSC withdrawal rules.
Conclusion: NSC vs FD – Which Scheme Should You Choose?
NSC vs FD: Eventually, choosing NSC or FD depends on your financial capabilities. NSC might be the proper choice for tax benefits and assure determined development. In any case, FD might be the superior choice if you need adaptability and intriguing payouts.
Before deciding, consider the maturity amounts, tax liabilities, and investment horizon. The best way forward is to assess your financial needs and consult a financial advisor.
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