Many times, we receive a lump sum amount—whether it is from selling land, a family partition, FD maturity, or retirement money. If you want to invest this money in a safe place, the National Savings Certificate (NSC) is a good option. It is a post office scheme. The government sets its interest rate every three months. Since it is backed by the government, it offers guaranteed returns. You can open an account under this scheme by completing your KYC and submitting the required documents at any post office. Let’s understand this scheme in detail.

Who Can Invest in Post Office NSC?

You can open a single or joint account under the National Savings Certificate (NSC) scheme of the Post Office. A joint account can have up to three adults. A guardian can open an account in the name of a minor or a mentally challenged person. A minor above 10 years of age can also open their own account. There is no limit on the number of accounts one can open. You can also add a nominee, including a minor, to your account.

How Much Can You Deposit?

The minimum deposit in an NSC account is ₹1,000. There is no maximum limit for the deposit. Investments made in NSC qualify for tax exemption under Section 80C of the Income Tax Act. You can claim tax benefit on investments up to ₹1.5 lakh per financial year.

What is the Interest Rate?

Currently, NSC offers an interest rate of 7.7% per year. This is a compound annual interest rate, and the total interest is paid out on maturity.

Can You Take a Loan Against NSC?

Yes, you can take a secured loan by pledging your NSC at a bank or NBFC. This means you can get a loan without breaking your savings.

What is the Maturity Period?

  1. The maturity period of NSC is 5 years.
  2. For the first 4 years, the interest is reinvested and also qualifies for tax exemption.
  3. In the 5th year, interest is not reinvested, so it becomes taxable.
  4. On maturity, you receive the full amount (principal + interest).
  5. Premature closure is not allowed except in special cases like the death of the account holder or a court order.

How to Earn ₹4 Lakh Interest in 5 Years?

  • If both husband and wife are working, they can invest together in a joint NSC account.
  • If they invest a lump sum of ₹9 lakh, they will earn more than ₹4 lakh interest in just 5 years.
  • On maturity, they will receive a total of ₹13,04,130, which includes ₹4,04,130 as interest.