Post Office vs NSC: Post Office FD and NSC are both popular government schemes for investing with a 5-year investment horizon. However, it’s important to understand which scheme offers better returns so you can decide which one is right for you. For tax savings and better returns, we usually think of bank or market schemes. However, we often forget to explore post office schemes. Like banks, post offices also offer savings and investment schemes. These schemes offer guaranteed returns, while also carrying no risk. Post offices offer several small and large savings schemes, including fixed deposits and National Savings Certificates (NSCs). These are both popular options over the long term. The question is, if you want a safe investment and a high return, where should you invest?

What is NSC and FD?

National Savings Certificate is a fixed income investment scheme offered by the post office. Investing in NSC can earn you higher returns than bank FDs. If you invest in this scheme with planning, you can build a substantial corpus in 5 years. Like banks, post offices also offer fixed deposit schemes. Their tenures can be 1 year, 3 years, 5 years, 7 years, 10 years, 15 years, or even more.

How much will you have to invest?

In the NSC scheme, you can invest Rs 100, Rs 500, Rs 1000, Rs 5000, Rs 10000 or even more. If you are taking a loan from the bank, you can keep NSC as security. The minimum investment required for a Post Office FD is Rs 1,000. There is no maximum investment limit.

How much interest do you get?

National Savings Certificate: Currently, 7.7% interest is being given in this scheme. Currently, fixed deposits are offering an interest rate of 7.5% on a quarterly compounding basis.

 Tax exemption?

Any money you invest in a National Savings Certificate can be claimed as a tax deduction under Section 80C of the Income Tax Act. You can invest a maximum of Rs 1.5 lakh in NSC to avail this tax deduction. While 5-year FDs are eligible for 80C deduction, the interest earned on maturity is taxable as income.

Which of the two schemes will make you rich first?

For returns on investments of Rs 10 lakh, NSC is often a better option than post office FDs, as they offer a compounding interest rate of 7.7%, which is higher than FDs. NSCs also offer higher tax deductions, while TDS may be deducted on interest earned on FDs. If you want safe and high returns, invest in NSCs. If you’re looking for flexibility, invest in FDs.