Tax-Saving FDs vs. NSC: Which Investment Wins for Section 80C?

• Both tax-saving FDs and National Savings Certificates (NSC) offer Section 80C benefits with a five-year lock-in and fixed returns.
• Tax-saving FDs: Interest is fully taxable annually as per income slab, even if not received, and banks may deduct TDS.
• NSC: Interest compounds internally, and annual interest (except final year) can be re-claimed under Section 80C, offering a tax advantage.
• While returns are similar, NSC often provides a better post-tax outcome, especially for higher tax brackets, due to deferred tax on interest.
• Both options lack flexibility for early withdrawals, making them suitable only if funds are not needed for five years.