Post Office Scheme: If you are looking for an investment where your money is completely safe and you receive a guaranteed return after a fixed period, then the Post Office’s National Savings Certificate (NSC) scheme can be a good option for you. This scheme is especially useful for those who do not want to take risks and want to build a secure fund for the future. Backed by the guarantee of the Government of India, this scheme is reliable and also helps in saving on taxes.

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What is a National Savings Certificate?

The National Savings Certificate is a popular small savings scheme offered by the Post Office and supported by the government. Investments in this scheme are not affected by market fluctuations, and the returns are predetermined. This is why it is quite popular among the middle class and those planning for retirement. The maturity period of NSC is 5 years, and investments can be started with a minimum of ₹1,000. There is no maximum investment limit, meaning you can invest any amount according to your capacity.

Interest Rate and Returns

Currently, the government offers an annual interest rate of 7.7% on NSC. If an investor invests a lump sum of ₹10 lakhs in this scheme, they will receive approximately ₹14.49 lakhs after 5 years. This means that approximately ₹4.49 lakhs is earned solely from interest. In this scheme, the interest is compounded annually, which further increases the total return.

Tax Saving Benefits

One major advantage of investing in NSC is the tax benefit. The amount invested in this scheme is eligible for a tax deduction of up to ₹1.5 lakhs annually under Section 80C of the Income Tax Act. Additionally, the interest earned each year is considered reinvested, thus also qualifying for tax exemption. However, the interest received at maturity is taxable.

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Who can invest in NSC?

Only a resident of India can open an NSC account. NRIs, companies, trusts, and HUFs cannot invest in this scheme. Any adult can open an account in their own name or in the name of a minor child. Two or three people can also open a joint account. A child aged 10 years or older can purchase an NSC (National Savings Certificate) in their own name. A guardian can open an account for a mentally incapacitated person.