The interest rates on National Savings Certificate (NSC) deposits have increased during the first half of 2023. This scheme is now offering better interest rates as compared to Bank Fixed Deposit (FD), PPF and Kisan Vikas Patra.
The Finance Ministry increased the NSC interest rate to 7.7 percent from 7 percent in the previous quarter for the April-June quarter of the financial year 2023-24. There was no change in the interest rate for the July-September quarter.
Better returns than FD
However, this scheme still offers a better rate of interest than most 5-year Fixed Deposit schemes offered by private and public sector banks. Apart from this, among all small savings schemes, NSC is currently offering the third highest interest rate after Senior Citizen Savings Scheme (8.2%) and Sukanya Samriddhi Scheme (8%). Small savings schemes that offer lower interest rates than NSC include Public Provident Fund, Kisan Vikas Patra, Post Office Recurring Deposit (RD) and Fixed Deposit and Monthly Income Account.
You can get this much amount on maturity
NSC account matures in 5 years. In this you can start with at least 1000 rupees. After this you can invest any amount in multiples of 100. There is no maximum limit on the amount that can be invested in an NSC account. An investment of Rs 10,000 at the current 7.7% interest will grow to Rs 14,490 on maturity. If you invest Rs 1 lakh in NSC account now, you will get Rs 1,44,900 on maturity after 5 years.
National Savings Certificate Vs Fixed Deposit
NSC interest is compounded annually and investment up to Rs 1.5 lakh per year in this scheme is also eligible for deduction under Section 80C of the Income Tax Act. The current interest rate of NSC makes it better than 5-year tax savings fixed deposits offered by banks. Even for amounts above Rs 1.5 lakh per annum, NSC is better than Fixed Deposits as it is backed by the Government of India.
In the April-June quarter, the government also increased interest rates on other small savings schemes like Senior Citizen Savings Scheme, Sukanya Samriddhi Scheme, Kisan Vikas Patra, Post Office Fixed Deposit, Post Office Monthly Income Scheme and Post Office Recurring Deposit.
