Investment in India Post National Savings Certificate
Indian citizens are well aware of India Post since their childhood. It was the only means of communication for millions and has now become a popular financial services provider in the country. From September 1, 2018, India Post operates IPPB (India Post Payments Bank) across the country. It is a 100% state owned bank which has authorized nearly 17 crores Post Office Savings Bank Accounts in IPPB. This bank provides a range of financial services to Indian citizens including account services, QR code payment services, UPI (Unified Payment Interface), NEFT (National Electronic Funds Transfer), IMPS (Immediate Payment Service), Gross Settlement real time, Bharat Bill Payment, DBT (Direct Benefit Transfer) etc. through its wide network of post offices and electronic banking. That’s it for the distribution and scope of IPPB now. If you are thinking of a safe investment, start banking with IPPB. Post offices have many savings schemes that will help you save your money and earn while investing it. For taxpayers, the NSC (National Savings Certificate) is a popular investment option. Let’s know more about this investment scheme as described by India Post.
National Savings Certificate (NSC):
As discussed earlier, this scheme is very popular among income tax payers. Many people may not know about such a scheme which offers a safe and convenient way to invest their hard earned money.
Investment term:
NSC has a fixed period ie. 5 years according to the 8th issue.
Interest rate:
If you invest in NSC, you will get 7.9% (from 1 July 2019) per annum compounded annually. However, it is payable after maturity.
Minimum and maximum balance limit:
A minimum of Rs. 1000/- and multiples of Rs. 100/- can be invested for NSC. There is no maximum investment limit. Earlier a certificate was issued and now (from July 1, 2016) a bank passbook is issued for the NSC account.
Who can open an account with NSC?
The following people can open an NSC account at IPPB and Post Offices
1. An adult can open an account on behalf of a minor
2. Minors over the age of 10 can open one account
3. A person with a mental illness can also open an account with the help of a guardian
4. An adult can open an account
5. A joint account type “A” can be opened with a maximum of 3 adults (In this case the amount is paid to both of them)
6. A joint account type “B” can be opened with a maximum of 3 adults (In this case the amount is paid to each of them)
Scope of Income Tax Rebate:
If you are an income tax payer, you may be looking for sources where you can invest and get a tax break at the same time. NSC is here for you. It comes under Section 80C of the Information Technology Act. Your NSC deposits are eligible for tax credit, but remember to calculate the total amount of your 80C investments. As per 80C you can invest a maximum of Rs. 1,50,000/-.
Transfer of NSC from one person to another:
Yes, this is possible. An NSC after opening can be transferred to another person only once from the date of opening to the date of maturity. In this case, the old name will be rounded off by the post office and the new name of the holder will be recorded in the passbook while other procedures and formalities are followed.
How does this investment grow money?
Although there is an interest rate of 7.9% is paid for NSC, you may be looking for an actual calculation that shows your money growing and after 5 years you are getting that much for your investment from this scheme. Let us do a calculation for the value of Rs. 70,000/-
Calculation of NSC:
Principal amount of investment – Rs. 70,000/-
Interest provided by IPPB – 7.9% per annum compounded annually
Term of the investment – 5 years
Based on the above details let’s calculate and see how much you will get after 5 years.
Year——-Interest for the year—–Total interest —–Total balance for the year
1st————-5,530.00—————–5,530.00————— — -75,530.00
2nd————5,966.87—————-11,496.87—————-81,496.87
3rd————6,438.25—————-17,935.12—————- -87,935.12
4th————6,946.87—————-24,882.00—————-94,882.00
5th————7 495.68—————-32 377.68———– —–102,377.68
At the time of maturity, the amount Rs. 70,000/- becomes Rs. 102,377.68/-. This means a total of Rs. 32,377.68 is your profit on an investment of seventy thousand rupees. You also get a tax rebate on the principal investment amount for the first year. Isn’t it a good investment plan? We hope this article will help Indians who are planning long term investment and good returns over a period of five years. As India Post is a government organization, it is safe and 100% secure.
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