National Savings Certificate (NSC) is one of the most popular small saving instrument that gives you tax benefits too. The scheme is backed by the government of India and is therefore considered a safe investment. We look into 5 facts that make the NSC an attractive investment.
Tax benefit available under section 80C.
You can invest in the NSC for a 5 year or 10 year duration. Tax benefit is applicable on NSC under 80C up to a limit of Rs 1.5 lakh. Tax Deduction on source (TDS) is not applicable on NSC.
Interest rate almost at par with banks.
NSC offers an attractive rate of interest. The interest rate on NSC for 5 years is 8.5 per cent and 10 years is at 8.8 per cent which is compounded half-yearly. This is almost at par with interest rates offered by banks.
There is no maximum limit for investment
There is no maximum limit for investment in NSC. However, you must keep in mind that the overall investment including interest earned does not exceed the limit of Rs 1.5 lakh.
Certificates act as collaterals for obtaining loans.
You can avail loans against your 5 year NSC. Banks keep the certificates as collateral and gives loans against them.
Premature Encashment is available.
Premature encashment is available on NSC. However, if the certificate is encashed within one year from the date of issue then only the face value is paid to the investors.