Bank FD v/s NSC

Hi Friends,
I would like to invest 10,000 as tax-savings for the financial year 2008-2009. I do not want to invest in equity. I have coouple of options with me

1) Bank FD
2) NSC from post Office

SBI gives 8.5% interest for 5 year deposit. We cannot take the money before 5 years. Canara bank also gives 8.5% interest for 5 years.

On the other hand NSC from post office gives 8% and it is compounded half-yearly.

Could you please share your views on both of them? Which gives the maximum returns? What are the tax-implication post maturity?

Thanks
-Pradeep

The interest rates of Bank FD are also compounded monthly in the cumulative option.
NSC has a lock-in of 6 yrs as against 5 yrs for Bank FD
Interest annually accrued on NSC can be annually claimed as further savings u/s 80C within the overall limit of Rs.1 Lakh but no such benefit is available for Bank FD.
Both interest are fully taxable.
Final choice is up to u only.

Go with neither. Invest in PPF.

The only problem with PPF is that money is locked for 15 years (from the date of opening the account).

Originally Posted by just4kix

Go with neither. Invest in PPF.

The only problem with PPF is that money is locked for 15 years (from the date of opening the account).

In PPF, you can start withdrawing money from the 7th year.In the 7th year you can withdraw upto 50% of amount you had at the end of 4th year.