If you want to invest money for a long term, but do not want to take any kind of risk, then you can invest in National Savings Certificate i.e. NSC of the post office. In this scheme of the post office, you are getting interest up to 7.7%, on which no TDS is deducted. Apart from this, you get many other benefits.
Benefit of compounding
In Post Office NSC, you get the benefit of compounding interest like FD, this makes your money grow faster. Investment can be started in the scheme from Rs 1000, there is no limit on maximum investment.
Tax Benefits
Investing in NSC gives tax exemption under Section 80C of the Income Tax Act. However, this exemption is available only on investment up to Rs 1.5 lakh. The interest received from NSC for the first 4 years is reinvested, hence tax exemption is given. However, after completion of 5 years, NSC cannot be reinvested, so the interest earned is taxed as per the tax slab rate. TDS is not applicable on interest amount (TDS Rule in NSC).
How much return will you get on investment of 1, 2 and 5 lakhs
If you invest Rs 1,00,000 in NSC, then you will get Rs 1,44,903 on maturity at the rate of 7.7 percent interest. On investing Rs 2,00,000, you will get Rs 2,89,807 and on depositing Rs 5,00,000, you will get Rs 7,24,517 on maturity.
Who can open an account
Any citizen can open an account in it. There is also a facility of joint account. Guardians can invest in it on behalf of a minor or a person of unsound mind. On the other hand, minors above 10 years of age can buy it in their name. NSC can be transferred from one person to another once between the date of issue and maturity date.
Rules for premature closure
NSC scheme matures in 5 years. Once you invest in it, the same interest rate which was applicable at the time of investment remains applicable for the entire 5 years. There is no option of premature closure in NSC. It can be closed prematurely only under special circumstances like death of the account holder, death of both the account holders in case of joint account or on any order of the government or court.
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