National Savings Certificate (NSC): What you should know

Are you planning to invest your money in National Savings Certificate (NSC)? Here’s what you should know

1 What is it:

NSC is a tax-saving instrument under section 80C of the Income Tax Act. (Representative Image)

NSC is a tax-saving instrument under section 80C of the Income Tax Act. If you invest in NSC, you will get tax benefit on ₹1.5 lakh as tax deduction. Considering it is a fixed income product, you get a guaranteed return. The ministry of finance, like any other small savings scheme, relooks at the interest rate every quarter and can revise it. However, the interest rate is pre-determined and guaranteed.

2 Lock-in for long-term:

Remember that NSC has a lock-in period. There are two maturity tenures—five and 10 years. However, premature withdrawals are allowed in exceptional cases such as death. In case you want to take a loan, you can opt for it against NSC investment. The loan-to-value ratio varies from bank to bank. However, considering it is a secured loan, the interest rate will be lower than personal loans.

3 Low-risk instrument:

It is a low-risk instrument. If you have an investment horizon of 10 years, you may want to look at other investment instruments, considering you have time to take the risk. It works for those who don’t want to take risk and don’t have access to other financial instruments.