What is the Difference Between FD and NSC?

What Is a National Savings Certificate?

What Is a Fixed Deposit?

What Are the Key Differences Between FD and NSC?

Following are some of the major differences between FD and NSC:

Parameters

FD

NSC

Tenure

You can open an FD for a maturity period that you deem convenient. The financial institutions give you a range of options.

The maturity period of the NSC remains fixed, as decided by the government. Your deposit will stay locked for 5 years.

Interest

The interest rate for FDs varies from one financial institution to another. Types of FDs are also one of the influencing factors for the interest rate.

There is no type of NSC and similarly, the interest rate is also singular for all beneficiaries.

Compounding Frequency

Most financial institutions add compound interest on the deposited amount quarterly. So, the compounding frequency is 4 in a year. Nevertheless, it can vary across financial institutions.

You earn interest on your NSC deposits on an annual basis. Hence, the compounding interest is once a year.

Tax Deducted at Source or TDS

You will have to bear a TDS of 10% on your FD earnings.

TDS is not applicable to your earnings from NSC deposits.

Premature Withdrawal

You can withdraw your funds from FD before the end of the tenure by paying a certain penalty between 0.5% and 1.0%.

You cannot withdraw your deposits from your NSC account at will.

Liable Entity

The financial institution is liable to return you your amount and the earned interest. In case of insolvency, you may or may not get the aggregated amount.

The NSC issued from the branch of India Post is the responsibility of the Government of India. All your earnings and deposits are backed by it.

What Are the Benefits of NSC?

What Are the Benefits of FD?

FD vs NSC - Which One Is Better?

FAQs about Fixed Deposit Vs NSC

When TDS is applicable on the FD earnings? up-arrow

If the earned interest is higher than ₹ 40,000, the financial institution will apply 10% TDS on the earning. However, this upper cap is ₹ 50,000 for senior citizens.

Under which conditions, premature withdrawal is possible in NSC? up-arrow

There are some predetermined provisions under which premature withdrawal is possible. These provisions include the demise of account holders, pledged forfeiture by a gazetted officer, and court orders.

What happens to the money kept in a Fixed Deposit account in case of the account holder’s death? up-arrow

In case the account holder passes away before the maturity of the FD, their nominee will be able to withdraw the fund. To get the amount, the nominee will have to submit the concerned withdrawal form and attach the death certificate of the account holder and their own identity proof. In case an individual opens a joint FD account, the survivor account holder will be able to withdraw the fund. For this also, the secondary account holder will have to provide the primary account holder’s death certificate.

How can I open my NSC account? up-arrow

You will have to reach your nearby post office branch and submit the duly filled application form for NSC along with the necessary documents. You can get the form from the post office branch itself.

Which documents do I need to provide to open my NSC account? up-arrow

The following documents are necessary while requesting for opening an NSC account:

  • Duly filled KYC form
  • Your PAN card and Aadhaar card (if the Aadhaar card is unavailable, you can also provide any other government-issued ID card like voter card, passport, driving licence, etc.)
  • A document serving as proof of your birth date

What are the types of FDs? up-arrow

There are multiple types of FDs apart from the regular one, catering to your diverse requirements. Some of these are tax-saving FDs, special FDs, Flexi FDs, senior citizen FDs, regular income FDs, etc. All these have unique features and advantages. For example, if you avail a senior citizen FD, you can enjoy an additional rate of interest on your deposits.