NSC: National Savings Certificate is a guaranteed return government scheme. It is a fixed income investment option, which is popular among investors. This 5-year government scheme can be started in post offices across the country.
NSC, National Savings Certificate: National Savings Certificate (NSC) is a government scheme with guaranteed returns. It is a fixed income investment option, which is popular among moderate or conservative investors. This 5-year government scheme can be started in post offices across the country, in which an account can be opened with a minimum of Rs 1000. However, there is no limit for maximum deposit. Tax benefits can also be availed under Section 80C in National Savings Certificate.
Interest Rate on NSC: How much interest is being received
According to India Post, 7.7 percent annual compounding interest is being received on the 5-year National Savings Certificate Scheme. In this scheme, interest is compounded annually and is payable on maturity. You cannot renew this scheme on maturity after 5 years. To continue investing in NSC after maturity, you will have to buy a new NSC certificate with the applicable interest rate.
What is the value of the certificates?
Certificates of 100, 500, 1000, 5000, 10,000 or more are available in NSC. There is no limit to investing in it. That is, you can buy any number of certificates.
NSC: How much profit in 5 years on investing 15 lakhs
- One time deposit: Rs 15 lakh
- Interest rate: 7.7% compounded annually
- Tenure: 5 years
- Amount on maturity: Rs 21,73,551
- Interest benefit: Rs 6,73,551
Tax Rules in NSC: Income Tax Rules
Investing in NSC provides tax exemption under Section 80C of the Income Tax Act. However, this exemption is available only on investments up to Rs 1.5 lakh. For the first 4 years, the interest earned from NSC is reinvested, so tax exemption is given. However, after completion of 5 years of NSC, it cannot be reinvested, so the income from interest is taxed according to the tax slab rate. There is no TDS on interest amount (TDS Rule in NSC).
Show income in ITR
The principal amount invested in NSC is received after 5 years by adding it with interest. While filing tax return, it has to be kept in mind that every year in ITR, accrued interest has to be shown as income. CBDT rule says that it is necessary to show the interest income of NSC in every year’s ITR. Suppose you have invested Rs 1 lakh in NSC and are getting interest at the rate of 7.7 percent, then it will be necessary to show the income of Rs 7700 every year in ITR.
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