Tax Saver Bank FDs Vs National Savings Certificate: Interest Rates & Features Compared

Fixed Deposits (FDs) offer higher returns than savings accounts and are a good choice for those looking to save money and generate a consistent income. The ability to invest money for a set period of time and receive returns at a set interest rate makes FDs a popular choice for investors. However, after the recent hike in Post office savings schemes, which one is good and offers attractive interest rates?

In the current situation, where fixed deposit interest rates have increased significantly over the past 1 year, small saving schemes have become a major investment destination. Before we actually put these small savings schemes up against one another to see which is best for which case, it is crucial to know what they actually mean and how they work.

Tax Saver FDs

Tax-saving fixed deposits (FDs), which are widely available, come to mind when you think of small savings with tax benefits as it offers both at the same time. Tax-saving FDs are safer investments because they are debt-based rather than equity-based, like ELSS plans. A tax-saving FD's returns are likewise guaranteed by the lender and are fixed for the duration of the FD.

The 5-year fixed deposit returns are taxed, with the exception of a few tax-saving deposits that a select few banks offer. According to Section 80D of the Income Tax Act of 1961, applicable tax benefits can be obtained for tax-saver accounts. A tax-saving fixed deposit requires a minimum investment of Rs. 100 and a maximum investment of Rs. 1.5 lakh every fiscal year.

Latest Tax Saver Interest Rates Offered by Major Banks

Axis Bank - 7%

State Bank Of India (SBI) - 6.5

HDFC Bank - 7%

ICICI Bank - 7%

Punjab National Bank - 6.5%

Bank Of Baroda - 6.5%

Kotak Mahindra bank - 6.2%

National Savings Certificates (NSC)

Just like the banks' tax saver fixed deposits (FDs) scheme, National Savings Certificates (NSC) come with a lock-in period of five years. Despite having a longer investment duration, National Savings Certificates (NSC) offer a number of advantages, including tax advantages. Compared to savings accounts, fixed deposits offer a substantially higher rate of return. It provides a variety of advantages, including tax advantages. It's critical to comprehend what these savings plans are, how they work, and other aspects before deciding to invest your money in them.

Investors can now expect higher returns on their NSC account investments as a result of the recent increase in interest rates announced by the government. The interest rate on NSC was recently raised by the Indian government to 7.7%.

National Savings Certificate (NSC) - 7.7% interest rate

To open an NSC account in the Post office, you required a minimum amount of Rs 1000 and thereafter in multiples of Rs 100. There is no limit on the maximum amount that you can invest in this scheme.