Post Office NSC Scheme: If you deposit 80 thousand rupees, you will get this much money after 5 years
Post Office NSC Scheme If you are looking for an investment option that gives safe and guaranteed returns, then the National Savings Certificate (NSC) scheme of the Post Office is a great option for you. This scheme is not only safe, but you also get good interest and tax exemption on investing in it.
If you invest ₹ 80,000, you will be surprised to know how much money you will get after 5 years. Let us know in detail about the benefits, interest rate, and return amount of this scheme.
Post Office NSC Scheme: What is National Savings Certificate (NSC)?
1. Introduction to NSC Scheme
NSC (National Savings Certificate) is a government guaranteed scheme , which is run through the post office. This scheme provides a safe investment option for the medium term.
- Investment period: 5 years (Fixed term).
- Interest Rate: 7.7% (current rate, as of Q1 2024-25).
- Minimum investment: Starts at ₹1,000, thereafter invest in multiples of ₹100.
- Maximum Limit: No maximum limit.
- Tax benefits: Tax exemption on investments up to ₹1.5 lakh under section 80C.
2. Features of NSC
| Speciality | Description |
|---|---|
| interest rate | 7.7% (revised quarterly by the Government) |
| Lock-in period | 5 years |
| Minimum Investment Amount | ₹1,000 |
| Maximum Investment Limit | No Limit |
| Tax exemption | Investment up to ₹1.5 lakh is tax free under section 80C |
| interest paid | Interest on interest (compound interest), total payout on maturity |
Post Office NSC Scheme: How much amount will be received after 5 years on investing ₹80,000?
1. Rate of interest and method of calculation
NSC provides compound interest annually , but it is paid in lump sum on maturity.
- Interest Rate: 7.7% per annum.
- Investment period: 5 years.
Formula (Compound Interest Formula):
A=P×(1+r/n)n×tA = P \times (1 + r/n)^{n \times t}A=P×(1+r/n)n×t
Where,
- A = Total amount on maturity.
- P = Initial investment (₹80,000).
- r = interest rate (7.7% or 0.077).
- n = Frequency of compounding of interest (annually = 1).
- t = Investment period (5 years).
Also see : EPFO Pension
2. Interest calculation and maturity amount
| Year | Initial Investment (₹) | Interest Rate (%) | Interest at the end of the year (₹) | Total Amount (₹) |
|---|---|---|---|---|
| Year 1 | 80,000 | 7.7% | 6,160 | 86,160 |
| Year 2 | 86,160 | 7.7% | 6,638 | 92,798 |
| Year 3 | 92,798 | 7.7% | 7,143 | 99,941 |
| Year 4 | 99,941 | 7.7% | 7,695 | 1,07,636 |
| Year 5 | 1,07,636 | 7.7% | 8,287 | 1,15,923 |
Result: By investing ₹ 80,000, you will get ₹ 1,15,923 after 5 years . That is, you will get a total profit of ₹ 35,923 .
Benefits of investing in NSC
1. Safe and guaranteed returns
NSC is a government scheme , hence investment in it is completely safe and returns are guaranteed.
2. Tax exemption
- Investments up to ₹1.5 lakh are eligible for tax exemption under Section 80C .
- For the first 4 years, the interest is considered as reinvestment and is also tax exempt.
3. Use as security to avail a loan
You can use NSC as security for a loan . Banks and financial institutions accept it.
4. Easy and flexible investment options
- You can start investing with a minimum of ₹1,000.
- There is no need to invest for a specific time frame for the long term.
Process to invest in NSC
1. Process of investing in post office
- Go to the nearest post office.
- Fill the form to open NSC account.
- Submit the required documents:
- Aadhaar Card/PAN Card
- Address Proof (Ration card, Electricity bill etc.).
- Pay by cash, check, or online transfer.
- Get the certificate or keep it as e-NSC in your post office account.
2. Facility to buy NSC online
- Download India Post Payments Bank (IPPB) App.
- Login and select NSC scheme.
- Enter the investment amount and make the payment.
- The digital certificate will appear in your account.
Other investment options compared to NSC
| Investment Plan | interest rate | Investment Period | tax benefit | Type of Return |
|---|---|---|---|---|
| NSC (National Savings Certificate) | 7.7% | 5 years | Exemption under section 80C | Guaranteed Returns |
| PPF (Public Provident Fund) | 7.1% | 15 years | Exemption under section 80C | Guaranteed, tax-free returns |
| FD (Fixed Deposit) | 5.5% – 7% | 1-5 years | TDS Applicable | Guaranteed, taxable returns |
| KVP (Kisan Vikas Patra) | 7.5% | 115 months (9.5 years) | No tax benefits | The amount doubles in 115 months |
| ELSS (Equity Linked Savings Scheme) | 12-15% (approximate) | 3 year | Exemption under section 80C | Market linked, risky |
Advantages and disadvantages of investing in NSC
| Benefits | Damage |
|---|---|
| Guaranteed returns and government protection | Interest rates may change from time to time. |
| Tax exemption under section 80C | The interest amount is taxable. |
| Used as security for a loan | Withdrawal before 5 years is not possible (except in some special cases). |
| Easy and minimum investment options | Returns may be lower compared to other investment options. |
Things to keep in mind before investing in NSC
- Understand the lock-in period: Your money gets locked in NSC for 5 years , so make sure you don’t need the money during that period.
- Keep an eye on interest rates: NSC interest rates are revised quarterly by the government, so make sure to check the latest interest rates before investing.
- Use for tax planning: Use NSC to save tax under Section 80C , but note that the interest amount is taxable.
- Make a nomination: While buying NSC, make sure to add the name of the nominee so that in case of an unexpected situation, the family can get the benefit of the investment.
Conclusion: Safe and profitable returns from investing ₹80,000
If you are looking for a safe, guaranteed, and tax-saving investment option, then the Post Office NSC scheme is a great option for you. Investing ₹80,000 will give you around ₹1,15,923 in 5 years, which is a stable and government-guaranteed return.