The national savings certificate is an investment scheme that can be opened up with any post office in India. It is a fixed income scheme initiated by the government of India enabling the investors to save on taxes while investing in this savings bond. It is mainly targeted towards small and mid-income investors while anyone can opt for this scheme. This scheme like bank FDs or PO RDs or PPF is a low-risk scheme good for risk-averse people. There are two options in the maturity period; 5-year scheme and 10-year scheme. Although there is no cap on the maximum amount of scheme but an investment only up to Rs. 1.5 Lakh will fetch tax benefits under the Income Tax Act’s section 80C. the government keeps on revising the rate of interest every quarter which presently is 7.6%. the interest earned on the principal amount is added back and compounded annually till the time of maturity.
Note: In the case of subscribers who opted for the scheme at a given time and then before maturity of the scheme move abroad or become NRI, the scheme will be held till maturity.
NSC comes with a tax benefit on investment up to Rs. 1.5 Lakhs under the Income Tax Act’s Section 80C. Second year onwards, tax rebate can be claimed on the interest earned in the first year. This is so because the interest is compounded annually and added back to the initial investment.