National Savings Certificate (NSC) interest rate calculation: Did you know that the National Savings Certificate small savings scheme is a fixed-income certificate investment plan that not only grows your money steadily but also offers income tax benefits worth up to Rs 1.5 lakh a year? The National Savings Certificate (NSC), one of the few guaranteed income small savings schemes available in post offices, will deliver a return of 7.7 per cent per annum for the quarter ending June 30, 2024, according to the India Post Website, indiapost.gov.in.

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The interest is compounded annually and paid at a maturity period of five years.  

First things first, here are five important details to know about the NSC savings scheme:  

What is NSC? 

The National Savings Certificate (NSC) is a fixed-income, certificate-based investment scheme, which essentially means that investment in this financial instrument gets locked for a predetermined period and is returned to the depositor along with applicable interest accumulated at a predetermined, 'fixed' rate of interest after the completion of that period. This period is known as the maturity period. 

National Savings Certificate investment examples

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Now, given the 7.7 per cent interest rate applicable to the NSC small savings scheme is compounded annually, here's a table illustrating how initial investments of Rs 1,100, Rs 11,000, Rs 21,000, and Rs 51,000 grow at the end of each year in this guaranteed income instrument: 

Period Corpus at the end of each year till maturity
Rs 1,100 investment  Rs 11,000 investment Rs 21,000 investment Rs 51,000 investment
End of first year Rs 1,185 Rs 11,847 Rs 22,617 Rs 54,927
End of second year Rs 1,276 Rs 12,759 Rs 24,358.5 Rs 59,156
End of third year Rs 1,374 Rs 13,742 Rs 26,234 Rs 63,711
End of fourth year Rs 1,480 Rs 14,800 Rs 28,254 Rs 68,617
End of fifth year (maturity) Rs 1,594 Rs 15,939 Rs 30,430 Rs 73,901

Hence, the amounts at the end of the first, second, third, and fourth years given above are only to understand how the money grows gradually till the investor reaches the end of the maturity period, and are not the amount the investor gets in case the premature withdrawal option is exercised.   

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What are the investment limits applicable to the National Savings Certificates?

While no upper limit applies to the NSC scheme, one can start an investment at the post office against the payment of a minimum one-time sum of Rs 1,000 or any other amount in multiples of Rs 100, according to the India Post website. 

Who can invest in the post office NSC scheme?

Individuals can invest in the NSC scheme singly or jointly (up to three adults), as a guardian on behalf of a minor below 10 years, or as a minor above 10 years of age.

Can you liquidate an NSC deposit prematurely?

One can withdraw funds from the NSC investment prematurely (before the completion of five years from investment) under certain conditions. These conditions are listed below: 

  • In case of the death of the account holder in a single mode 
  • In case of the death of any of the account holders in a joint mode
  • In case of forfeiture by a pledgee being a Gazetted officer 
  • In case of a court order  

Income tax benefit under Section 80C

Many financial planners say that the savings certificates are suitable for investors looking to avoid riskier instruments while availing income tax benefits under Section 80C of the Income Tax Act.

NSC deposits qualify for a deduction in taxable income up to Rs 1.50 lakh a financial year tax laws. 

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