The NSC (National Saving Certificate) is one of the most popular post office savings programmes that offer guaranteed returns as well as Section 80C tax benefits.
Many financial planners recommend this scheme to their clients as it is a safe investment and gives assured returns.
Interest Rate of NSC
Under this scheme, the interest rate is 6.8%. If you put Rs 1000 in NSCs now, you will get Rs 1389 in 5 years. Similarly, if you invest Rs 10 lakh in NSCs today, you will get Rs 13.89 lakh in 5 years. There is no maximum limit for investing in this scheme.
Tax Benefit by NSC
If you invest more than Rs 1.5 lakh in NSC, you qualify for an income tax deduction under Section 80C of the Income Tax. The interest rate of NSC is revised every year and hence the NSC investments are assumed to be re-invested every year. However, when the NSC matures, the entire interest amount that is earned by you becomes taxable. Due to this finance experts suggest that investors should invest in the lowest IT bracket so that when the NSC matures, no TDS is cut.
Premature closing of NSC
You can withdraw your NSC in only 3 situations – depositor’s death, court orders or forfeiture by a pledge. If you redeem it in a year, only face value is paid. If you redeem in 3 years of purchase, the simple interest rate applies to the post office account is paid.
For more breaking news, click here.