If you’re looking to invest your money away from the fluctuations of the stock market, where your investment is 100% safe, and you’ll receive steady returns, the Post Office’s National Savings Certificate (NSC) scheme is a great option. Backed by the Government of India, this scheme not only provides guaranteed profits but also helps you build a large corpus for the future.
Currently, NSC interest rates are better than many bank FDs. In this article, we’ll explore in detail how this scheme can help you earn lakhs of rupees in just 5 years and receive significant income tax benefits.
How much profit will you earn on ₹10 lakh
The Post Office’s National Savings Certificate scheme currently offers an annual interest rate of 7.7%. The biggest strength of this scheme is its compounding (compound interest), where you earn interest on interest.
If you make a lump sum investment of ₹10,00,000, you will receive approximately ₹449,034 in interest alone upon completion of the 5-year maturity period. Thus, after 5 years, you will have a total of ₹1449,034 in hand. This is the most reliable way to earn a substantial income from home without any risk.
Key Features of the NSC Scheme
Several reasons make this Post Office savings scheme special. First, it comes with complete government protection, which means your money is completely safe. You can start investing with as little as ₹1,000. The most powerful thing is that there is no maximum investment limit.
You can deposit as much money as you want, depending on your financial capacity. Furthermore, the interest rate determined at the time of investment remains fixed for the entire 5 years, meaning it is unaffected by market fluctuations.
Substantial Income Tax Discount
NSC not only helps in wealth creation but is also a powerful tool for tax savings. Under Section 80C of the Income Tax Act, you can avail a tax deduction on investments up to ₹1.5 lakh annually. Interestingly, the annual interest earned on NSC is considered a reinvestment, providing you with tax relief every year. Although tax rules apply to the total amount received upon maturity, it significantly reduces your tax burden for 5 years.
Who can open an NSC account
To avail the benefits of this scheme, it is important to know some basic eligibility rules. This account is available only to Indian resident citizens; non-resident Indians (NRIs) or companies cannot invest in it.
You can open it as a single account or as a joint account with three adults, depending on your convenience. It is also good for the future of children – a child above 10 years of age can take NSC in his/her name, while for younger children, their guardian can open the account.
