National Savings Certificate

National Savings Certificate or NSC is a great investment option that comes with the advantage of tax saving.

NSC can be obtained from any post office by Indian citizens. This investment option is a preferred choice of individuals who are looking for safer investment avenues as it is backed by the Government of India, consequently carrying a low risk.

Currently NSC VIII with a tenure of 5 years is available for subscription. The interest rates for NSC range between 7-8% PA and is fixed by the Ministry of Finance every financial year. For instance, the NSC interest rate for FY 2019-20 is at 8% compounded annually.

While the minimum investment amount is Rs 100, unlike PPF there is no limit to the maximum amount that can be deposited . However, only Rs 1.5 Lakh Rs qualify for a tax exemption under Section 80 C annually.

Another important point to note is that NSC interest is not tax exempt. However, the interest amount accumulates in the account and is not paid to the depositor. So technically, the interest earned each year can be considered as a reinvested amount, and hence is eligible as a fresh deduction under Section 80 C, thereby making it tax free.