Many investors look for safe and reliable investment options, especially when stock markets are volatile and bank fixed deposit (FD) rates are not very attractive.
One such option is the National Savings Certificate (NSC), a government-backed savings scheme that offers guaranteed returns and tax benefits. It is particularly popular among investors who prefer low-risk investments.
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What Is the Current Interest Rate on NSC?
The National Savings Certificate currently offers an interest rate of 7.7% per year.
This rate is higher than the interest offered by many banks on five-year fixed deposits.
Since the interest rate remains fixed throughout the investment period, investors know in advance how much money they will receive at maturity.
The investment period for NSC is five years, and the interest is compounded annually.
How Much Will ₹1 Lakh Become After 5 Years?
If you invest ₹1 lakh in NSC at the current interest rate of 7.7%, your money can grow significantly over five years.
NSC Calculation
Investment Amount: ₹1,00,000
Interest Rate: 7.7% per year
Investment Period: 5 years
Maturity Value: ₹1,44,903
Total Interest Earned: ₹44,903
This means a one-time investment of ₹1 lakh can generate nearly ₹45,000 in interest over five years.
Tax Benefit Available Under Section 80C
NSC also offers tax-saving benefits.
Investors who choose the old tax regime can claim a deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act.
However, this benefit is not available to taxpayers who have opted for the new tax regime.
Can an NSC Account Be Transferred?
Yes, an NSC account can be transferred under certain conditions.
The account may be transferred to a nominee or legal heir after the death of the account holder.
In the case of a joint account, the transfer can be made to the surviving account holder or holders.
Transfers may also be allowed in cases involving court orders or specific legal situations permitted under the scheme rules.
Rules for Premature Closure of NSC
Normally, an NSC account cannot be closed before the five-year maturity period.
However, premature closure is allowed in a few exceptional cases:
Death of the account holder in a single account.
Death of one or all account holders in a joint account.
Closure due to a court order.
Certain cases involving pledged or mortgaged certificates as permitted under scheme rules.
What Happens If You Close the Account Early?
The interest payout depends on how long the account has remained active.
If Closed Within One Year
You will receive only the original investment amount.
No interest will be paid.
If Closed After One Year but Before Three Years
You will receive your principal amount along with interest for the applicable period.
However, the interest will be calculated at the rate applicable to a Post Office Savings Account, which is generally lower than the NSC interest rate.
Why NSC Remains a Popular Choice
NSC continues to attract investors because it combines safety, guaranteed returns, and tax benefits in a single investment product.
For those looking for a low-risk investment option with predictable returns, the National Savings Certificate remains one of the most trusted government-backed schemes available today.