National Savings Certificate : If you are looking for a safe investment, the National Savings Certificate (NSC) scheme of the post office can be a reliable option. This scheme not only comes with a government guarantee, but also provides a fixed interest rate and tax exemption.
Currently, the National Savings Certificate offers an annual interest rate of 7.7%, which is compounded annually, meaning interest is earned on interest. If a person invests ₹4 lakh in this scheme, he will receive ₹5.79 lakh at the end of the 5-year maturity period. This means that their amount will grow by ₹1.79 lakh without any risk.
What is NSC scheme?
National Savings Certificate (NSC) is a small savings scheme of the Central Government, which is run by the Post Office. Its tenure is 5 years. Investors can invest any amount in multiples of ₹1,000. There is no maximum investment limit.
Tax benefits will also be available.
Investments in NSC are tax-deductible. Under Section 80C of the Income Tax Act, investors can avail tax exemption on investments up to Rs 1.5 lakh. The interest received every year is also considered as reinvestment, which is tax-deductible.
How to open an account
NSC certificates can be opened at any post office branch. It only requires KYC documents, a PAN card and an Aadhaar card.
Five key benefits of NSC:
1. Collateral for a loan: You can use the National Savings Certificate as security or collateral, meaning you can take a loan against it from a bank or financial institution if needed.
2. Tax Savings: Investing in National Savings Certificates offers tax exemption of up to ₹1.5 lakh under Section 80C of the Income Tax Act.
3. Government Guarantee: This is a scheme backed by the Government of India, hence investments are completely safe and returns are guaranteed.
4. Better interest rates: The interest earned on NSC is generally higher than that of Fixed Deposit (FD) and increases annually through compounding.
