National Savings Certificates: In the second small savings scheme, the interest rate is reviewed every quarter but at the time of investment in NSC, the interest rate remains the same for the entire maturity period.
National Savings Certificates: A special saving scheme in small savings schemes is National Savings Certificates (NSC). The maturity of this investment option is five years. Returns are guaranteed in this. You can also take advantage of income tax deduction on investment in NSC. Talking about the interest rate, in the second small saving scheme, the interest rate is reviewed every quarter, but at the time of investment in NSC, the interest rate remains the same for the entire maturity period.
Minimum investment amount in NSC
Currently, the interest rate on NSC for new investors is 6.8% per annum. The minimum investment amount in NSC is 1000 rupees and you can invest money in multiple of 100. There is no maximum investment limit. Let us know that interest is not paid to the investor every year, but it gets deposited. NSCs have a lock-in period of 5 years.
Exemption in income tax also
If you invest in NSC, then you can get tax exemption by investing up to Rs 1.5 lakh per year in NSC under Section 80C of Income Tax. On taxable income, the amount is deducted from the total income. In the context of income tax, the interest earned annually on the NSC is considered reinvested by the investor and is eligible for tax deduction under Section 80C within the total limit of Rs 1.5 lakh.
This amount will not be reinvested
If you have invested in NSC, then the amount cannot be invested twice in the fifth year or the last year of maturity. The amount of interest received from the NSC in the final year is added to the certificate holder’s income and the tax is applied accordingly. You can take a loan on the basis of NSC.
