National Savings Certificate (NSC) calculation: With the recent hike in interest rates, investors can now get higher returns on their investments in NSC account.
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National Savings Certificate (NSC) calculation: With the recent hike in interest rates, investors can now get higher returns on their investments in NSC account. The Government of India recently increased the NSC interest rate to 7.7%. At this rate, an investment of Rs 1000 will grow to Rs 1403 after 5 years. Similarly, an investment of Rs 1 lakh will grow to over Rs 1.4 lakh after five years.
The minimum amount with which you can open an NSC account is Rs 1000 and thereafter in multiples of Rs 100. There is no limit on the maximum amount that you can invest in this scheme.
How NSC interest payment works
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The interest on NSC deposits is compounded annually but payable at maturity. Moreover, the deposits qualify for tax deduction under Section 80C of the Income Tax Act, subject to the limit of Rs 1.5 lakh per year
Individuals who do not have any investments under various schemes that qualify for deduction under Section 80C can enjoy the tax benefit by investing up to Rs 1.5 lakh/year in NSC account.
The NSC accountholder can demand a certificate for annual accrual of interest from the account office. However, the payment is made only after 5 years. Also, interest accrued at the end of each year up to the end of the fourth year is deemed to have been reinvested on behalf of the account holder and aggregated with the amount of face value of the certificate.
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Better than Bank Fixed Deposit?
At 7.7%, the current NSC interest rate is better than many 5-year fixed deposit schemes offered by banks. Moreover, there is a full guarantee of return of deposits and interest under NSC as the scheme enjoys a sovereign guarantee. However, in the case of FDs, only up to Rs 5 lakh is guaranteed under RBI’s Deposit Insurance Credit Guarantee Scheme (DICGC).
