Investment in NSC is tax-exempt. You can claim tax deduction by investing in NSC under section 80C
There has been an increase in the interest of people in fixed return investment options after the recent events. They have less risk. Tax exemption is available. National Saving Certificate is one such scheme. What are the benefits of investing in it, how much return is available in it, who can invest in it? Let us try to know the answers to these questions.
How much is interest rate?
At present the interest rate of this scheme is 6.8%. The government had introduced this scheme keeping in mind the people of low to middle income group. It gives assured returns with very little risk.
What is the minimum investment required?
This scheme is available in the post office. It is part of the small savings schemes of the government. The government reviews the interest rate of small savings schemes every quarter.
One can invest in National Savings Certificates with a minimum of Rs 1,000. There is no maximum limit for investment in this scheme. You can invest more if you want. But you will get tax exemption only on investment of Rs 1.5 lakh in a financial year.
Can a loan be taken by mortgage?
One can invest in it either for himself or in the name of the child. One of the good things about this scheme is that the loan can be taken against the NSC by mortgaging it with the bank.
How is bank better than FD?
Recently, HDFC Bank, Axis Bank and Kotak Mahindra Bank have increased interest rates on FDs of different maturities. HDFC Bank offers an interest rate of 5.1 to 5.6 per cent on fixed deposits of Rs 2 crore. It depends on the tenure of the FD. In this way, this scheme is better than bank FD in terms of returns.
Do you get tax exemption?
Investment in NSC is tax-exempt. You can claim tax deduction by investing in NSC under section 80C. In this, tax deduction can be availed by investing a maximum of Rs 1.5 lakh in a financial year.
Money is returned after five years
NSC matures in five years. This means that after five years of investing, you get your money back with interest. One of the good things about this scheme is that TDS is not allowed on maturity.
There is no reinvestment facility
There is no reinvestment option in this scheme. This means that after maturity you will have to buy new NSCs.
