National Savings Certificates (NSC): How Much Interest You Earn On Rs 5,000, Rs 10,000, Rs 15,000 Deposits?

One of the small saving schemes backed by the government, National Savings Certificates (NSC) offers guaranteed returns for a fixed tenure of 5 years. The interest rate offered in NSC accounts is as competitive as private and public sector banks. Investing in NSC is cheap with deposit amounts starting at a minimum of Rs 1,000.

The higher the investment amount, the higher returns you gain. Apart from this, there are also tax benefits offered under the scheme.

Here's how much you would earn on deposits of Rs 5,000, Rs 10,000, Rs 15,000, and Rs 1,00,000.

Firstly, the interest rate offered under the NSC scheme is as high as 7.7% which is compounded annually but payable at maturity. The tenure for the National Savings Certificate (VIII Issue) is 5 years. The minimum investment is Rs 1,000 and in multiples of Rs 100. There is no maximum limit for investment.

Additionally, the deposits qualify for deduction under section 80C of the Income Tax Act. This section enables investors to avail tax exemption of up to Rs 1.5 lakh.

Since, interest rates compound annually, and would add up to withdrawal on maturity, here's how much you make on the above-mentioned deposit amounts:

1. Rs 5,000 Investment:

1st Year: Rs 5000 + Rs 385 interest amount (7.7% of Rs 5,000) = Rs 5,385.

2nd Year: Rs 5,385 + Rs 414.645 interest (7.7% on Rs 5,385) = Rs 5,799.65.

3rd Year: Rs 5,799.65 + Rs 446.57 interest (7.7% on Rs 5,799.65) = Rs 6,246.22

4th Year: Rs 6,246.22 + Rs 480.95 interest (7.7% of Rs 6,246.22) - Rs 6,727.17.

5th Year: Rs 6,727.17 + Rs 517.99 interest (7.7% of Rs 6,727.17) = Rs 7,245.17.

So you earn interest of Rs 2,245.17 on your investment value of Rs 5,000, taking your total corpus to Rs 7,245.17.

Rs 10,000 Deposit:

1st Year: Rs 10,770 (Rs 10,000 + 7.7% interest)

2nd Year: Rs 11,599.29 (Rs 10,770 + 7.7% interest)

3rd Year: Rs 12,492.43 (Rs 11,599.29 + 7.7% interest)

4th Year: Rs 13,454.35 (Rs 12,492.43 + 7.7% interest).

5th Year: Rs 14,490.338 (Rs 13,454.35 + 7.7% interest rate.

Accordingly, on your Rs 10,000 deposit, you earned interest of Rs 4,490.34, taking your corpus to Rs 14,490.34.

Rs 15,000 Deposits:

1st Year: Rs 16,155 (Rs 15,000 +7.7% rate)

2nd Year: Rs 17,398.93 (Rs 16,155 + 7.7% rate)

3rd Year: Rs 18,738.65 (Rs 17,398.93 + 7.7% rate).

4th Year: Rs 20,181.52 (Rs 18,738.65 + 7.7% rate)

5th Year: Rs 21,735.51 (Rs 20,181.52 + 7.7% rate).

Thereby, on a Rs 15,000 deposit, you earn interest up to Rs 6,735.51, taking your corporate to Rs 21,735.51.

But if you invested an even higher amount, your gains would only rise further.

For instance, if you deposited Rs 1,00,000 in NSC, your gains would follow as:

1st Year: Rs 1,07,700 (Rs 1,00,000 + 7.7% rate); 2nd Year: Rs 1,15,992.9 (Rs 1,07,700 + 7.7% rate); 3rd Year: Rs 1,24,924.35 (Rs 1,15,992.9 + 7.7% rate); 4th Year: Rs 1,34,543.53(Rs 1,24,924.35 + 7.7% rate); and 5th Year: Rs 1,44,903.38 (Rs 1,34,543.53 + 7.7% rate).

Your investment of Rs 1,00,000, will earn interest of Rs 44,903.38, taking your corpus Rs 1,44,903.38.

Other Key Features:

Eligibility: single adult, joint account with 3 adults involving, a guardian on behalf of the minor or behalf of a person of unsound mind, and a minor above 10 years in his name are eligible to open this account.

Maturity: The deposit shall mature on completion of five years from the date of the deposit.

Pledging Of Account:

- NSC may be pledged or transferred as security, by submitting a prescribed application form at the concerned Post Office supported with an acceptance letter from the pledgee.
- Transfer/pledging can be made to the following authorities - The President of India/Governor of the State; RBI/Scheduled Bank/Co-operative Society/Co-operative Bank; Corporation (public/private)/Govt. Company/Local Authority; Housing finance company.

Premature closure:

NSC may not be prematurely closed before 5 years except the following conditions: (i) On the death of a single account, or any or all the account holders in a joint account; (ii) On forfeiture by a pledgee being a Gazetted officer; and (iii) On order by court.

Transfer of account from one person to another person: NSC may be transferred from one person to another person on the following conditions only - (i)On the death of account holder to nominee/legal heirs; (ii) On the death of account holder to joint holder(s); (iii) On order by the court; and (iv) On pledging of account to the specified authority.