Post Office NSC Scheme: In today’s world, everyone wants a safe investment. If you are also looking for a scheme that offers returns without any risk, then a fantastic scheme from the Post Office could be perfect for you. We are talking about the Post Office National Savings Certificate (NSC) scheme. This scheme is operated by the government of India, and the returns on investment are completely guaranteed, meaning it is unaffected by market fluctuations. Additionally, this investment also offers tax benefits under Section 80C of the Income Tax Act, making it beneficial for tax savings as well.
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NSC Interest Rate and Tax Benefits
The National Savings Certificate offers an annual interest rate of 7.7%. The interest is calculated annually, but it is paid only upon maturity, i.e., after 5 years. The interest rate fixed at the time of investment remains constant for the entire five years. The interest earned on NSC is considered reinvested; therefore, except for the final year, it is tax-free under Section 80C.
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How much return will you get on an investment of ₹2,50,000?
The return on NSC is calculated according to the compound interest formula: Maturity Amount = P × (1 + r/n)^(n×t). Here, P = Principal investment amount, r = Interest rate, n = Compounding frequency, and t = Investment period.
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If you invest ₹2,50,000 as a lump sum at an annual interest rate of 7.7%, you will receive a fixed return of ₹1,16,062 in five years. This means that at maturity, you will have a total fund of ₹3,66,062.
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Who can invest?
All Indian citizens can invest in the National Savings Certificate. NRIs cannot invest in this scheme, but if a resident becomes an NRI in the future, they can retain their certificate until maturity. Individual investors can invest in their own name.
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Additionally, guardians of minors or mentally incapacitated individuals can invest on their behalf. Children above 10 years of age can also invest in this scheme. Note that trusts and Hindu Undivided Families (HUFs) cannot invest directly in this scheme, but the Karta of an HUF can invest in NSC in their individual name.