To determine whether an investment is most suitable for customers, here's a comparison of the features of the National Savings Certificate with those of five-year bank fixed deposits.
Common people and senior persons both now have access to a variety of investing possibilities. Since a while ago, the post office's schemes have changed away from fixed deposits due to rate increases. The central government recently raised the appeal of small savings plans. These programmes also include tax savings programmes. Senior adults, on the other hand, are earning higher money as a result of the rise in fixed deposit interest rates.
Lets us discuss certain post office programmes that offer higher interest rates than tax-saving fixed deposits if you intend to invest in tax-saving schemes. Options like the National Savings System and time deposits are part of these schemes.
How much interest are these post office programmes paying?
For the quarter spanning April to June, the federal government raised the interest rate on the National Savings Certificate Program by 70 basis points. The interest in NSC grew from 7 per cent during the previous quarter to 7.7 per cent at the same time. The rate of time deposits has also gone up, reaching 7.5 per cent at the same time. In addition, the interest rate on the remaining small savings plans has gone raised.
What bank is offering what rate of interest on FDs?
The majority of interest is being offered on tax-saving FDs by major banks in the nation. Interest rates are offered by HDFC Bank at 7%, Axis Bank at 7%, Bank of Baroda at 6.5%, Central Bank at 6.7%, ICICI Bank at 7%, IndusInd Bank at 7.25%, DCB Bank at 7.6%, Yes Bank at 7%, and IDFC Bank at 7%. These interests are all being granted for the same length of time.
How much will be saved in taxes?
If you choose the previous tax system and deposit money in an NSC, you can save tax under section 80C by up to Rs. 1.5 lakh per year. On the other side, tax-saving FDs also allow you to save up to Rs 1.5 lakh yearly.
Investment cap: tax-saving FD vs. NSC
- For Nationals Savings Certificates, you can invest as little as Rs 1,000. There is no upper limit, though.
- In the meantime, the maximum amount you can invest in tax-saving fixed deposits is Rs 1.5 lakh.
TDS: Tax-saving FD vs NSC
The National Savings Certificate interest earned is not subject to tax withheld at source (TDS). When total interest income from all parked deposits with them surpasses Rs 40,000 in a financial year, however, a TDS of 10% would be applied. Your return will also be reduced by the TDS deduction on the interest income from bank fixed deposits that save on taxes.
Loans available
NSC can be used as security for loans by individuals. A bank's tax-saving FD, however, cannot be utilised to obtain loans.
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