The National Savings Certificate (NSC) is a fixed income investment scheme supported by the Government of India. This scheme is especially for those who want safe and guaranteed returns. Available through the post office, this scheme is a great option to save tax and save for the future. In this article we will discuss the complete information of NSC, its advantages, interest rates, and other conditions.
What is the National Savings Certificate (NSC)?
NSC is a small savings scheme launched by the Government of India. It can be purchased from the post office and comes with a 5 -year fixed maturity period. Investing in it not only gives you a certain interest but you can also avail tax savings.
| Properties | Description |
| Name of the scheme | National Savings Certificate (NSC) |
| Interest rate | 7.7% per year (current) |
| Minimum investment amount | ₹ 1,000 |
| Maximum investment limit | No limit |
| Maturity period | 5 years |
| tax benefit | Under Section 80C ₹ 1.5 lakh |
| Who can invest? | Indian citizen only |
Benefits of NSC Scheme
- Guaranteed Return:
The interest rate on investment in NSC is fixed by the government and it is fixed. Currently this rate is 7.7% per year. - Tax Savings:
Section 80C of the Income Tax Act provides tax exemption of up to ₹ 1.5 lakh. - Benefits of compounding:
Interest is compound every year and is paid on maturity. - Safe investment:
Since the scheme is supported by the Government of India, there is no risk in it. - Loan facility:
Loans can be taken from the bank using as NSC collateral. - Enrollment facility:
The investor can nominate a member of his family so that the person can get the amount of NSC after his death.
Interest Rates and Return Calculation on NSC
The current interest rate on NSC is 7.7% per year. This interest is compound every year and paid on maturity. Understand the example below:
Investment of ₹ 1 lakh:
- 1 year later: ₹ 1,07700
- 2 years later: ₹ 1,15729
- 3 years later: ₹ 1,24060
- 4 years later: ₹ 1,32771
- 5 years later: ₹ 1,41883
Thus, your ₹ 1 lakh in 5 years will become about ₹ 1.42 lakh.
Who can invest in NSC?
- Indian citizen
- Minor (by guardian)
- Facility to open joint account
Can not invest:
- NRI (Non-Resident Indians)
- Hindu undivided family (HUF)
How to buy NSC?
The process of buying NSC is very simple:
- Go to the nearest post office.
- Fill the application form and submit the required KYC documents.
- Pay minimum amount of ₹ 1,000 or more.
- You will be issued a NSC certificate.
NSC Scheme Terms and Conditions
- Equivalence before maturity:
Normally withdrawal is not possible before maturity. However, some special circumstances such as investor death or court order may be withdrawn. - Transfer facility:
NSC can be transferred from one person to another or one post office to another. - Tax on interest:
The interest on maturity is taxed according to the tax slab. However, TDS does not apply. - Minimum and maximum investment limit:
The minimum investment starts at ₹ 1,000 and does not have a maximum limit.
NSC vs other savings schemes
| Plan | Interest rate | Lock-in period | tax benefit |
| NSC | 7.7% | 5 years | Yes |
| commission | 7.1% | 15 years | Yes |
| FD (tax saver) | 6%-7% | 5 years | Yes |
Can you make ₹ 72 lakh from NSC?
If you invest large amount regularly, then your return may increase due to compounding. However, it will not be possible to make such a large amount by investing in NSC only until you add a large amount every year.
Disclaimer:
This article is written only for the purpose of providing information. NSC is a safe and guaranteed return scheme but has limited returns. To make a large amount like “₹ 72 lakh”, you should also consider other high returns schemes. Consult the financial advisor before investing in any scheme.
