NSC vs PPF vs Tax-Saving FD: Best 80C Fixed-Income Choice

All three offer 80C benefits. But lock-in, liquidity, and post-tax returns differ dramatically. Here is the side-by-side comparison.

1.Return comparison

NSC: **7.7%** compounded annually, paid at maturity. PPF: **7.1%** compounded annually, tax-free. Tax-saving FD: **7.0-7.5%** (varies by bank), interest taxable annually. On ₹1.5 lakh for the minimum lock-in: NSC (5 years) matures at ₹2,18,274. PPF (15 years) — can't compare directly due to different horizons. Tax-saving FD (5 years) at 7.25% = ₹2,13,150 before tax, ~₹2,02,850 after 30% tax.

2.Lock-in and liquidity

NSC: 5 years, **no premature withdrawal**. PPF: 15 years, partial withdrawal from year 7, loan from year 3. Tax-saving FD: 5 years, **no premature withdrawal**. For liquidity, PPF is the best of the three despite the longest lock-in, because of the partial withdrawal and loan provisions. NSC and tax-saving FD are equally illiquid.

3.Tax treatment

PPF wins hands down — EEE (exempt-exempt-exempt). NSC interest is taxable at slab rate at maturity (but accrued interest years 1-4 get 80C benefit). FD interest is taxable annually at slab rate with TDS. For someone in the 30% bracket, effective returns: PPF 7.1%, NSC ~6.8% (after accounting for maturity year tax), FD ~5.0%. The tax differential makes PPF the clear winner for anyone with a 15-year horizon.

4.Key takeaway

If you can lock in for 15 years, PPF beats both. If you need a 5-year instrument, NSC beats tax-saving FDs for most investors due to the accrued interest 80C advantage. Use our NSC calculator alongside the PPF calculator to compare exact numbers for your investment amount.