National Savings Certificate

What is National savings certificate (NSC)?

It is a fixed income investment scheme initiated by the Government to encourage small and medium income investors to deposit money. The scheme comes with compulsory investment period of 5 years and 10 years. While the maximum investment limit is not specified, investments upto Rs.1.5 lakh is eligible for a tax break under Section 80C of the Income Tax Act. 

Why invest in NSC? 

Fixed income: This scheme allows you to get guaranteed returns through interest income and compounding your money.

Tax saving: The scheme offers sovereign guarantee and is a tax saving investment. So, investments upto Rs. 1.5 lakhs are eligible for tax deduction under Section 80C.

Interest rate: Currently the interest rate of NSC is 6.8% per annuum. It is a safe investment avenue that earns steady interest income throughout its tenure.

Accessibility: Any Indian citizen can purchase this scheme from post office simply by submitting the KYC documents. NSC can be purchased in single name, jointly or by adults on behalf of a minor. 

Power of compounding: The interest on the deposits is reinvested by default, thus gaining you the benefit of compounding.

Tax benefits on NSC:

Investing in NSC is a safer way to generate returns especially for retirees. This low-risk investment also attracts tax benefits that giving you slightly better returns. Tax benefits are available under Section 88 on the invested amount while exemptions can be claimed under Section 80L on the accrued interest. Also, investments up to to Rs. 1.5 Lakh qualifies under tax deduction under Section 80C. 

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