The National Savings Certificate, or NSC, still smells of the controlled economy in India. However, if you come to think of it, NSC offers the highest interest rate of all the savings instruments available in the post office. The Senior Citizens Saving Scheme certainly offers a higher rate, but it is not open to all – youo have to be above 60 to buy one – and it has a cap on the amount you can deposit. NSC has none of these fetters.
Now check the rates of interest offered by different small savings schemes from the post office. PPF (Public Provident Fund): 7.1%; MIS (Monthly Income Scheme): 7.4%; Recurring Deposit (compounded quarterly): 6.7%; FDs of different tenure (1-5 years): 6.9-7.5%; Kisan Vikas Patra: 7.5%. The National Savings Certificate, or NSC, offer 7.7%.
What is NSC (National Savings Certificate)
The NSC enjoys a sovereign guarantee on the safety of the capital. It was launched in 1989 to offer to the common citizen of India guaranteed decent returns along with income tax benefits. The NSC offers income tax deduction according to Section 80C of the Income Tax Act 1961. The maximum amount of investment that will con considered for income tax deductions in a financial year is Rs 1.5 lakh.
One needs to invest a minimum amount of Rs 1,000 in an NSC but there is no ceiling on the maximum amount one can invest in this instrument. The NSC has a fixed maturity period of 5 years. One can buy one in one’s own name or in the name of a minor too (above 10 years). However, only Indians can invest. NRIs are not permitted to buy NSC.
What will be Rs 1 lakh in NSC after 5 years?
If you put Rs 1 lakh ion NSC, after 5 years it will generate an interest of Rs 44,903. Therefore, on maturity the investor will get back Rs 1,44,903 as the total payment. As is the rule with small savings instruments, the government reviews the interest rate on NSC every quarter. All banks and non-banking financial institutions accept NSC as collateral while sanctioning loans. In order to do this, the post master of the concerned post office has to a “transfer stamp” on the certificate and shift it to the bank. The lender will return it to the original owner when the loan is repaid fully.
Of all the savings instruments that the good old post office offers, the National Savings Certificate, or NSC, offers the highest interest rate leaving aside the Senior Citizens Saving Scheme. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
