Post Office Savings Plan: Invest Rs 10 lakh and turn it into Rs 14 lakh in 5 years - Here's how

The National Saving Certificate (NSC) is one of the most favoured post office savings plans that provide guaranteed returns and tax benefits to its investors under Section 80C. 

Experts state that NSC can also be used by senior citizens to get a uniform monthly income. NSCs can be purchased by an individual or on behalf of a minor. It can also be purchased jointly by two people. 

National Saving Certificate: Interest rate 

The interest rate for NSC is set by the government every quarter. The rate for the current quarter is 6.8%. If you buy an NSCs for Rs 1000 today then your investment will rise to Rs 1389 in five years. Notably, NSCs can be purchased for any amount as there is no maximum limit of investment. 

Therefore, if you invest Rs 10 lakh today, your money will rise to Rs 13.89 lakh in five years.

National Saving Certificate: Tax Benefit 

An amount of up to Rs 1.5 lakh invested in NSCs, every financial year, qualifies for income tax deduction under Section 80C of the Income Tax Act. However, as soon as NSC matures, the full interest made becomes taxable in the depositor's hands. Investing in NSCs is especially good for the lowest income tax group.No TDS is subtracted when the certificate is redeemed.

National Saving Certificate: Premature encashment 

Premature encashment of NSC is allowed only under three circumstances;

1. The depositor's death
2. Court orders, or 
3. Forfeiture by a pledgee. 

It is important to note that only the face value is paid if NSC is redeemed within one year of purchase.