National Savings Certificate (NSC) interest rate calculation: Did you know that the National Savings Certificate small savings scheme is a fixed-income certificate investment plan that not only grows your money steadily but also offers income tax benefits worth up to Rs 1.5 lakh a year? The National Savings Certificate (NSC), one of the few guaranteed income small savings schemes available in post offices, delivers a return of 7.7 per cent per annum for the quarter ending March 31, 2024, compounded annually and paid at the maturity period of five years, according to the India Post Website, indiapost.gov.in.

This article aims to illustrate how a one-time investment grows in this five-year post office scheme with a host of examples. 

But first things first, here are five important details to know about the NSC savings scheme:  

What is NSC? 

The National Savings Certificate (NSC) is a fixed-income, certificate-based investment scheme, which essentially means that investment in this financial instrument gets locked for a predetermined period and is returned to the depositor along with applicable interest accumulated at a predetermined, ‘fixed’ rate of interest after the completion of that period. This period is known as the maturity period. 

What are the investment limits applicable to the National Savings Certificates?

While no upper limit applies to the NSC scheme, one can start an investment at the post office against the payment of a minimum one-time sum of Rs 1,000 or any other amount in multiples of Rs 100, according to the India Post website. 

Who can invest in the post office NSC scheme?

Individuals can invest in the NSC scheme singly or jointly (up to three adults), as a guardian on behalf of a minor below 10 years, or as a minor above 10 years of age.

Can you liquidate an NSC deposit prematurely?

One can withdraw funds from the NSC investment prematurely (before the completion of five years from investment) under certain conditions. These conditions are listed below: 

• In case of the death of the account holder in a single mode 
• In case of the death of any of the account holders in a joint mode
• In case of forfeiture by a pledgee being a Gazetted officer 
• In case of a court order  

Income tax benefit under Section 80C

Many financial planners say that the savings certificates are suitable for investors looking to avoid riskier instruments while availing income tax benefits under Section 80C of the Income Tax Act.

NSC deposits qualify for a deduction in taxable income up to Rs 1.50 lakh a financial year tax laws. 

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National Savings Certificate investment examples

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Now, given the 7.7 per cent interest rate applicable to the NSC small savings scheme is compounded annually, here’s a table illustrating how initial investments of Rs 1,100, Rs 11,000, Rs 21,000, and Rs 51,000 grow at the end of each year in this guaranteed income instrument: 

Hence, the amounts at the end of the first, second, third, and fourth years given above are only to understand how the money grows gradually till the investor reaches the end of the maturity period, and are not the amount the investor gets in case the premature withdrawal option is exercised.   

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