NSC Calculator

What is National Savings Certificate (NSC)?

The National Savings Certificate (NSC) is a popular savings scheme offered by the Indian government. It's a low-risk investment that encourages small and medium-income investors to save money while also benefiting from tax savings under Section 80C of the Income Tax Act. They are available at post offices across India in denominations of ₹100, ₹500, ₹1,000, ₹5,000, and ₹10,000. The investment tenure is typically 5 years, and the interest rate is fixed at the time of purchase.

Key Benefits of Investing in NSC

• Guaranteed Returns: Being a government-backed scheme, NSC offers assured returns and is considered very safe.
• Tax Benefits: Investments up to ₹1.5 lakh per financial year qualify for tax deductions under Section 80C.
• Low Investment Threshold: You can start investing with as little as ₹100.
• Easy Access: Available at all post offices, making it accessible to a wide range of investors.
• Loan Collateral: NSCs can be pledged as collateral for obtaining loans from banks and financial institutions.

How NSC Interest is Calculated

NSC interest is compounded annually but is payable only at maturity. This means that the interest earned each year is reinvested with the principal amount, allowing it to earn further interest in subsequent years. The interest rate for NSCs is declared by the Ministry of Finance quarterly. Once you purchase an NSC, your interest rate remains fixed for the entire 5-year tenure.

While the interest is compounded annually, it is crucial to note that it is only credited to your account upon the completion of the 5-year lock-in period. For tax purposes, the annual accrued interest (except for the last year's interest) is deemed reinvested and qualifies for Section 80C deduction.

Tax Implications & Eligibility

• Section 80C Deduction: Up to ₹1.5 lakh invested in NSC in a financial year is eligible for tax deduction.
• Accrued Interest Tax: The interest earned annually (except the final year's interest) is considered reinvested and also qualifies for 80C deduction. The final year's interest and the maturity amount are taxable as "Income from Other Sources."
• Eligibility:
  • Any resident individual (singly or jointly)
  • A minor through a guardian
  • Trusts (not for Hindu Undivided Families or Non-Resident Indians)
• No TDS: Tax Deducted at Source (TDS) is not applicable on NSC interest.