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This Government Backed Scheme Offers An Interest Rate Of 6.8%


Government-backed schemes might give you less returns compared to equity or mutual funds, but they are assured and secured income options. The National Savings Certificates (NSC), offered by the Post Office, backed by the union government is one of those savings tools that will give an assured income after 5 years.

This Government Backed Scheme Offers An Interest Rate Of 6.8%

Interest Rates

The 5 Years National Savings Certificate (VIII Issue) is an investment option with fixed income, that offers an interest rate of 6.8%, compounded annually but payable at maturity. That rate is quite higher than some other assured income options. Hence, if you invest Rs. 1000 initially, that will offer you Rs. 1389.49, after 5 years. This is the lock-in period for the NSC scheme.

NSC Calculator

To count the interest amount under the NSC scheme, you must calculate it considering the interest rate and basic amount. The interest amount Interest calculation for one year will be, Interest amount = (Basic Amount * Interest Rate)/ 100.
So, if you invest Rs. 1000 as a basic amount, then your interest amount for the NSC scheme will be 68. so, your total return after one year will be 1068. But in the case of NSC, the interest is calculated at a compound rate, for 5 years. So, in case your basic investment amount is Rs. 1000, the calculation will be as mentioned below.

Principal amount * (1+ interest rate/number of time interest is compounded per unit) ^ number of years = Total return amount

So, the NSC return calculation should be like this: 1000 * (1 + 6.8/100 / 1) ^ 5 = 1389.49

Hence, after 5 years, your returns should be Rs. 1389.49, with a principal amount or basic amount of investment of Rs. 1000, according to the NSC calculator. Using this calculator you can calculate the NSC return, applying your particular basic investment amount.


Investment amount and tax

The minimum investment amount for the NSC is Rs. 1000 and in multiples of Rs. 100. There is no maximum limit of the investment. Your deposits will qualify for deduction under section 80C of the Income Tax Act.

Premature closure

NSC can only be prematurely closed before 5 years in case the single account holder dies, or any or all the account holders in a joint account dies.

To earn lucrative interest after a fixed timeline, you can also check the Post Office PPF scheme to get an assured income.

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