Post Office small savings schemes are one of the recommended investment options in India because of the government guarantee and stable returns. These schemes are for those investors who are willing to wait without taking any risk with their money. One of these schemes allows investors to deposit a lump-sum of ₹15 lakh and get guaranteed returns during a fixed time, thus, it becomes interesting for the long-term savers, retirees, and risk-averse people.
As one of the schemes, the Indian government supports post office schemes securing not only the principal amount but also the interest earnings against market fluctuations.
The Process Of Investing ₹15 Lakh And Its Growth Over Time
With the National Savings Certificate (NSC) scheme, the investment of ₹15 lakh mathes out slowly through annual compounding. At the prevailing interest rate of around 7.7% per annum, after five years the investment earns total of almost ₹21.7 lakh. Thus, the investors can get back their principal at maturity and also earn about ₹6.7 lakh as guaranteed interest.
The payment of interest is not monthly or annually but rather automatically reinvested, which thus enables the power of compounding to elevate the final returns. This kind of investment is for those who do not require income at regular intervals but want certain growth.
Prominent Aspects Of Post Office NSC Scheme
The five-year lock-in period is a characteristic of the NSC scheme, and premature withdrawals are allowed during this time only under specific situations like death of the account holder or a court order. There is no upper ceiling for the investment, and accounts can be opened at any post office branch across the country.
NSC accounts can be either individual or joint, and there is a provision for nomination to facilitate the transfer of funds to family members without hassles.
Tax Benefits And Interest Taxation Rules
One of the most significant advantages to investing in NSC is that it qualifies for a tax deduction under Section 80C of the Income tax act, which is applicable up to ₹1.5 lakh in a financial year. This, therefore, gives its tax-saving feature especially to salaried persons at the same time.
On the other hand, tax deduction on the principal amount is applicable while the interest is subject to taxation. The annual compounded interest is treated as reinvestment and must be reported as personal income, albeit no tax is withheld at the source.
Who Should Think About This Investment Option?
This postal savings scheme is most suitable for risk-averse investors, retired persons, and those who want a certain amount of return without risking the market. It is also a good place for people wanting to secure their future financial needs like children’s education or a retirement fund.
The long term returns may be lesser compared to equity investments but the certainty of capital protection and predictable growth makes this scheme a trustworthy savings option.
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