Risk-free returns? Here's why NSCs are a smart choice
What's the story
Looking for a safe yet rewarding way to grow your savings?
National Savings Certificates (NSCs) might be your golden ticket!
With government backing, steady interest rates, and tax perks, NSCs offer a sweet deal for investors who want security without sacrificing returns.
Whether you're a newbie investor or a seasoned saver, these certificates could be a smart addition to your portfolio.
But are they the best choice for you? Let's break it down and uncover everything you need to know!
Basics
What are National Savings Certificates?
National Savings Certificates are government bonds that promote small and medium investments by providing competitive interest rates.
Accessible at post offices throughout India, these certificates come with a fixed tenure of five years.
Currently, the rate of interest is 6.8% p.a. However, it is revised every quarter by the government.
The interest is compounded annually but is paid only at maturity.
Taxation
Tax benefits explained
One of the main advantages of NSCs is their tax efficiency under Section 80C of the Income Tax Act.
Investors can claim a deduction up to ₹1.5 lakh per annum by investing in NSCs.
Plus, the interest that accrues annually, though it is reinvested, is also eligible for deduction under Section 80C, except for the last year as it is paid out at maturity along with the principal amount.
Buying process
How to purchase NSCs?
Purchasing NSCs is simple and can be done at any post office across India.
An investor is required to complete an application form and submit it with KYC documents (Aadhaar card or PAN card), and payment for the desired number of certificates.
NSCs can be purchased in denominations ranging from ₹100 with no maximum limit.
Investment tips
Key considerations before investing
Although NSCs provide multiple benefits such as security and tax advantages, investors should evaluate their liquidity requirements before investing due to the five-year lock-in period of these certificates.
Plus, comparing the prevailing interest rates with other fixed-income instruments can assist in making an informed decision about where to invest for the best returns.