National Savings Certificate NSC scheme is a fixed income scheme. It is one of the popular savings instruments in India. One can activate this scheme at any Post Office. NSC scheme is the Government of India initiative. Hence it guarantees returns. This savings bond encourages small and mid-income investors to save. Additionally, they can also get a tax benefit. NSC investments up to Rs 1.5 lakhs is exempt from tax under Section 80C of the Income Tax Act. They come with a lock in period of 5 years. NSC certificates earn fixed interests. The current rate of interest is 6.8%. Like other fixed-income products PPF and Post Office FDs, NSC is also a secure and low-risk instrument. The minimum deposit is Rs 100. There is no maximum limit for investment in NSC. There is no TDS for NSC investments.
Interest for National Saving Certificate NSC is compounded half-yearly. The interest is payable to the investor at the end of the five years. The interest earned every year is reinvested. Let’s take the example of Mr. Ashish. He wishes to invest INR 5,00,000 in an NSC at the current interest rate. Using Dhan’sNSC Interest calculator, we can calculate the maturity amount and the interest earned by him. We can follow the simple steps to calculate the maturity amount earned by Mr. Ashish.
Go to Dhan’s NSC Interest calculator.
Enter the amount of investment. In this case, it is INR 5,00,000.
The term is already fixed at five years. This is because the NSC matures in 5 years.
The interest is fixed at 6.8%. This is the current interest rate announced by the Ministry of Finance as of April 1st, 2020.
Once the values are entered, click on calculate.
The NSC Interest Rate calculator calculates the maturity amount. It also calculates the investment made and interest earned. In this case, the maturity value is INR 6,98,514.45. The investment is INR 5,00,000. The interest earned is INR 1,98,514.45.
Mr. Ashish’s investment of INR 5,00,000 in NSC will earn an interest of INR 1,98,514.45 at the end of 5 years. The interest earned is taxable at the slab rate, Mr. Ashish falls.
Calculating the interest and maturity amount of NSC can be quite tedious and time taking. The interest is compounded half-yearly. The interest is added back to the investment. At the end of 5 years, the interest plus the principal is payable to the investor. It is quite natural that an investor wants to know how much an investment in NSC has grown. Dhan’s NSC calculator will help in calculating the maturity amount within seconds.
Here are a few advantages of using Dhan’s NSC Interest calculator.
The two types of NSC certificates are NSC VIII Issue and NSC IX Issue.
NSC VIII Issue – The VIII Issue comes with a maturity period of 5 years. The interest rate is 6.8% per annum.
NSC IX Issue – The IX Issue comes with a maturity period of 10 years. This issue has been discontinued since December 2015.
National Savings Certificates VIII Issue is an excellent scheme. The initial investment and the accrued interest for the first four years enjoy the benefit of Section 80C of Income Tax Act.
Investment in NSC is eligible for tax exemption under Section 80C of the Income Tax Act. The interest earned during the tenure is added to the initial investment. It is qualified for tax exemption as well.
For example, for an investment of Rs 5,000 in NSC, the investor can claim for a tax benefit in the first year. From the second year onwards, the tax claim can include the interest earned on NSC in the previous year and the NSC investment made in the current assessment year.
There is no Tax Deduction at Source (TDS) for NSC investment payouts. However, investors have to pay. The tax is as per their income tax slab rates on the maturity amount.
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