Is National Savings Certificate (NSC) better than bank fixed deposits?
National Savings Certificate is a savings bond issued by the Government of India, available to residents of India. It is a low-risk investment option that offers fixed returns.
NSC works similarly to traditional fixed deposits. This certificate has a fixed term of 5 years, and the interest is compounded annually but paid at the end of the tenure of 5 years.
The current interest rate of NSC is 7% p.a. and, like other post office savings schemes, the government updates the interest rate every quarter.
From a tax benefit point of view, your investment in this certificate is eligible for a tax deduction of up to ₹1.5 lakhs under section 80C. However, it is to be noted that interest earned is taxable.
But interest earned during the first 4 years on NSC is tax deductible under section 80C. How do you ask?
This is because the interest of NSC is re-invested for these 4 years. Remember, the invested amount and interest earned are only passed to you at maturity. In the 5th year, i.e. at maturity, the interest earned from NSC is subject to tax as per your slab rate under the head "Income from Other Sources".
Also, NSC can be used as collateral for securing loans from banks.
To know whether investing in NSC is better than investing in other schemes, check out our latest blog.
Link - https://blog.vrid.in/2023/03/21/what-...
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