The money invested in NSC or National Savings Certificate will earn a higher return from next month. The government has announced up to 0.4 per cent increase in interest rates applicable to small savings schemes such as the National Savings Certificate. The revised interest rates will be effective for the fiscal's third quarter, from October 1 to December 31, 2018, according to the Ministry of Finance. NSC is among the 12 national savings schemes provided by the government at present. Interest on National Savings Certificate is compounded on an annual basis but paid on maturity.
Here are five things to know about investment in National Savings Certificate:
1. Interest rate: Investment in National Savings Certificate (NSC) will fetch an interest rate of 8 per cent for the fiscal's third quarter, ending on December 31, 2018.
2. At present, an interest rate of 7.6 per cent is applicable, at which investment of Rs 100 grows to Rs 144.23 in five years, according to India Post. At the new interest rate of 8 per cent, an investment of Rs 100 is estimated to grow to Rs 147 in the same period.
3. Minimum investment required: Investment in the five-year National Savings Certificate can be made with a minimum of Rs 100 and and in multiples of Rs. 100, according to India Post, which has a network of more than 1.5 lakh post offices across the country. There is no upper limit on NSC investments.
4. How to invest: The National Savings Certificate is operated by the Department of Economic Affairs through the post office. "A single holder type certificate can be purchased by, an adult for himself or on behalf of a minor or by a minor," according to India Post.
5. Income tax benefit: Deposits in the National Savings Certificate qualify for deduction under Section 80C of the Income Tax Act. Section 80C of the Income Tax Act provides for income tax deductions up to Rs. 1.5 lakh in a financial year.