If you want to invest your money in a secure and stable surrounding wherein marketplace fluctuations have no effect and you can make certain first-rate returns, the National Savings Certificate (NSC) could be an awesome solution for you. The Indian Postal Department (India Post) administers this system, which is sponsored with the aid of the Indian government.
Key Features of the NSC Scheme:
| Feature | Description |
|---|---|
| Issuer | Government of India |
| Type | Fixed-income instrument |
| Tenure | 5 years |
| Minimum Investment | ₹1,000 |
| Maximum Investment | No upper limit |
| Interest Rate (as of now) | Approximately 7.7% per annum (compounded annually) |
| Mode of Issue | Digital (since 2016) or through Post Office |
| Tax Benefit | Eligible for deduction under Section 80C up to ₹1.5 lakh |
Example of earning up to ₹43.47 lakh in 5 years
Recently one such example has been revealed where an investor put in an amount of ₹43.47 lakh in 5 years by investing in NSC. In this, ₹50,000 was given each month, and interest continued to be added at the rate of 7.7% per year. This example proves that if you are investing continuously and in a disciplined way, then a good fund can be established without taking any risk.
Monthly Investment Breakdown:
| Month | Monthly Investment (₹) | Cumulative Investment (₹) | Maturity Value (₹) |
|---|---|---|---|
| January | 50,000 | 50,000 | 73,021 |
| February | 50,000 | 1,00,000 | 1,46,042 |
| March | 50,000 | 1,50,000 | 2,19,063 |
| April | 50,000 | 2,00,000 | 2,92,084 |
| May | 50,000 | 2,50,000 | 3,65,105 |
| June | 50,000 | 3,00,000 | 4,38,126 |
| July | 50,000 | 3,50,000 | 5,11,147 |
| August | 50,000 | 4,00,000 | 5,84,168 |
| … | … | … | … |
| After 5 Years | — | 30,00,000 | 43,47,000 (approx) |
Note: This is a sample based on 7.7% annual compound interest. Actual returns would be slightly different because interest rates can be altered by the Government from time to time.
What is NSC?
National Savings Certificate (NSC) is a fixed income scheme operated by the government and can be bought through post offices. This scheme is suitable for individuals who:
- Prefer safe investments.
- Prefer long-term savings
- Desire assured returns in addition to tax relief
Who can invest?
Anyone who resides in India can invest in NSC. It is particularly beneficial for:
- Salaried individuals who desire to save tax
- Retirees who are cautious
- Parents who wish to accumulate money for their children’s education or marriage
- First-time investors seeking a straightforward and secure scheme
Who is not permitted to invest?
- NRIs
- Hindu Undivided Family (HUF)
- Any trust or institution
Documents required for NSC investment
Some of the usual documents to be provided while investing are
Document Checklist:
| Requirement | Accepted Documents |
|---|---|
| Identity Proof | Aadhaar, PAN, Passport, Voter ID |
| Address Proof | Bank statement, Passport, Utility Bill |
| Passport-size Photo | Recent colored photograph |
| PAN Card | Mandatory for investments above ₹50,000 |
Advantages of investing in NSC
- Government guarantee: Government of India backed, money is secure.
- Fixed interest: Interest is fixed; the market rate does not influence it.
- Tax exemption: You can get up to ₹1.5 lakh tax-free under section 80C discounts.
- Begin with small amounts: You can begin with a minimum of ₹1000.
- Compound interest: Interest is added each year, and the amount increases faster.
Top Benefits of NSC:
| Benefit | Description |
|---|---|
| Government Assurance | Backed by the Indian government – virtually risk-free |
| Tax Saving | Deduction up to ₹1.5 lakh under Section 80C |
| Annual Compounding | Interest is compounded yearly and paid at maturity |
| No TDS | Interest is not subject to TDS at source |
| Ease of Access | Available at all post office branches across India |
| Flexible Investment | Backed by the Indian government, virtually risk-free |
NSC vs. Other Schemes
If you examine NSC with PPF (Public Provident Fund), FD (Fixed Deposit), or Senior Citizen Savings Scheme, NSC is best for individuals who need fixed returns and tax advantages but not an extended lock-in length.
| Feature | NSC | PPF | Bank FD | Senior Citizen Scheme |
|---|---|---|---|---|
| Lock-in Period | 5 years | 15 years | 1–10 years | 5 years |
| Interest Rate | 7.7% approx. | 7.1% approx. | 6.5–7% | 8.2% |
| Tax Deduction | Yes (80C) | Yes (80C) | Yes (80C) | Yes (80C) |
| TDS on Interest | No | No | Yes | Yes |
| Risk Level | Low | Very Low | Low | Very Low |
How to Invest in NSC?
Offline way (by going to the post office):
- Go to your local post office.
- Collect and fill out the NSC form.
- Submit the necessary documents, such as KYC and ID proof.
- Pay in cash, check, or demand draft.
- You will get an NSC certificate.
Online process (by utilizing the IPPB app):
- Download the IPPB (India Post Payments Bank) app.
- Get registered in it and connect it to your post office savings account.
- Choose the NSC scheme and fill in the amount.
- On payment, you will get an e-certificate.
Tax on interest from NSC
The interest earned annually is taxable.
But the interest for the previous four years is exempt from tax under Section 80C.
Taxation Overview:
| Year | Interest Earned (₹) | Taxable | Eligible under 80C? |
|---|---|---|---|
| 1 | 3,850 | Yes | Yes |
| 2 | 4,146 | Yes | Yes |
| 3 | 4,465 | Yes | Yes |
| 4 | 4,809 | Yes | Yes |
| 5 | 5,181 | Yes | No |
Last word of advice
If you wish to grow your wealth slowly by investing your funds in a secure and stable plan, then NSC is a sensible choice. Not only does it provide you with assured returns, but tax benefits also come your way.
The case of Rs 43.47 lakh proves that if you keep investingg small amounts of money every month consistently, you can accumulate a huge corpus within a matter of years—that too without putting your money at risk.
But before you invest, ensure that the scheme is suitable for your goals and requirements. Having a word with a financial advisor can also be a wise decision.
FAQs
1. What is the National Savings Certificate (NSC)?
NSC is a fixed-income investment scheme offered by India Post and backed by the Government, ideal for safe, long-term savings with assured returns and tax benefits.
2. How much can I earn by investing in NSC?
Consistent monthly investments in NSC, like ₹50,000 per month, can grow into over ₹43 lakh in 5 years at 7.7% compound interest, depending on rates.
3. Who can invest in NSC?
Any Indian resident can invest in NSC. It’s ideal for salaried individuals, retirees, parents, and beginners seeking tax savings and secure returns.
