Investing in the National Savings Certificate (NSC) the post office offers allows you to make long-term investments without any risk. Under this post office arrangement, you earn interest on which no TDS is deducted—up to 7.7%. Apart from this, you gain much more.
Compounding’s advantages
In Post Office NSC, you have the benefit of compounding interest like FD, which makes your money grow faster. Starting the scheme with Rs 1000, investment is not limited; it is free.
Tax Returns
Investing in NSC results in tax exemptions under the Income Tax Act Section 80C. However, this exemption only applies to investments up to Rs 1.5 lakh. We grant tax exemptions because we reinvested the interest NSC earned for the first four years. However, NSC cannot be reinvested after five years; hence, the interest received is taxed according to the tax slab rate. The TDS rule in NSC does not apply regarding the interest amount.
How much return on investments of one, two, and five lakhs?
Investing Rs 100,000 in NSC will result in Rs 144,903 on maturity at 7.7 percent interest. Investing Rs 200,000 will yield Rs 289,807; depositing Rs 500,000 will get Rs 724,517 on maturity.
Who can create an account?
Any resident can open an account there. Additionally available is a joint account facility. Guardians can invest in it on behalf of a juvenile or an individual with a mental illness. Minors above ten can purchase it under their name, on the other hand. You can transfer NSC from one person to another once, between the date of issue and the maturity date.
Guidelines for early closing
The NSC arrangement runs for five years. Once you invest in it, the same interest rate, which was current at the time of investment, remains valid for the entire 5 years. NSC does not offer a choice for early closing. It can be closed early only in cases of death of the account holder, death of both the account holders in case of a joint account, or on any order of the government or court.
