The NSC Investment Scheme is one of the most trusted options for investors seeking safe returns with no market risk. Post Office small savings schemes have always been popular among Indian households, especially for those who prefer a guaranteed income. However, following the investment rules is vital to maximise benefits from such schemes.
If you are planning to invest without risk and still want decent returns, the National Savings Certificate (NSC) offered by the post office can be a wise choice. This scheme allows investors to build a solid corpus primarily through interest earnings, making it suitable for conservative, long-term planners.
What is an Isa National Savings Certificate (NSC)?
National Savings Certificate is a government-backed small savings scheme designed primarily for middle-class investors and those planning for future financial security. The scheme offers a fixed lock-in period of five years, and investments can start with as little as ₹1,000. There is no upper limit on the maximum investment amount.
Since the Government of India supports NSC, it is considered one of the safest investment options available in the country.
Who Can Invest in NSC?
Only Indian residents are eligible to invest in the NSC. Non-resident Indians, companies, trusts, and Hindu Undivided Families are not allowed to invest in this scheme. Investors can open a single account or a joint account with two or three individuals.
Parents can also invest in NSC either in their own name or on behalf of their children, making it a valuable option for long-term family planning.
Tax Benefits Under Section 80C
One significant advantage of NSC is its tax benefits. Investments made under the NSC investment scheme qualify for tax deduction under Section 80C of the Income Tax Act. Investors can claim tax benefits of up to ₹1.5 lakh per financial year, helping reduce their overall tax liability.
This feature makes NSC attractive to salaried individuals seeking safe, tax-saving investment options.
Interest Rate and Returns Explained
Currently, the National Savings Certificate offers an annual interest rate of 7.7 per cent. The interest is compounded yearly and paid at maturity. When calculated over five years, the returns are pretty impressive for a risk-free scheme.
For example, if an investor deposits ₹10 lakh in an NSC, the total interest earned over five years is approximately ₹4,49,034. This means the maturity amount increases significantly without any exposure to market fluctuations.
The interest grows each year due to compounding, starting at ₹77,000 in the first year and increasing to ₹4.49 lakh by the end of the fifth year.
Why NSC Is a Good Risk-Free Investment Option?
NSC is ideal for investors seeking capital safety, fixed returns, and tax benefits in a single product. With a short lock-in period of five years and guaranteed interest, it suits people who are planning for medium-term goals without taking financial risks.