If you are looking for an investment where your money is completely safe and you also get guaranteed returns after the stipulated time, then the National Savings Certificate (NSC) Scheme of the Post Office can become a strong option for you. This scheme is special for those who do not want to take risk and want to create a secure fund for the future. This scheme, which comes with a government guarantee, is not only reliable, but also helps in saving tax.
What is National Savings Certificate (NSC)?
National Savings Certificate is a popular small savings scheme of the Post Office, which is supported by the Government of India. By investing in it, there is no impact of market fluctuations and the returns are already decided. This is the reason why this scheme is very much liked among the middle class and those planning for retirement. The maturity period of NSC is 5 years and investment in it can be started with a minimum of Rs 1,000. There is no maximum limit for investment, that is, you can invest any amount as per your capacity.
How much is the interest and how much return will I get?
At present the government is giving 7.7% annual interest on NSC. If an investor deposits Rs 10 lakh in lump sum in this scheme, then after completion of 5 years he gets approximately Rs 14.49 lakh. That means, approximately Rs 4.49 lakh is earned only from interest. In this scheme, interest is added every year and the benefit of compounding is available, due to which the total returns become better.
You also get the benefit of tax savings
A major advantage of investing in NSC is tax saving. Under Section 80C of the Income Tax Act, tax exemption of up to Rs 1.5 lakh is available annually on the money invested in this scheme. Apart from this, the interest received every year is considered reinvested, due to which one gets the benefit of tax exemption. However, the interest received on maturity is taxable.
Who can invest in NSC?
NSC account can be opened only by a person resident in India. NRIs, companies, trusts and HUFs cannot invest in this scheme. Any adult person can open an account in his own name or on behalf of a minor child. Two or three people can also open a joint account. A child of 10 years of age or older can also take NSC in his own name. For a mentally incompetent person, his guardian can open an account.
