Tax Saving Scheme: The financial year 2022-23 is coming to a close in a few days, and those looking to invest to save tax can do so until March 31. If you want to save tax while getting better returns on your investment, consider investing in the National Savings Certificate (NSC) scheme offered by the post office. Currently, the scheme provides a 7% annual interest rate. Here's what you need to know about the NSC scheme:
Tax exemption benefit: Investments in NSC are eligible for tax exemption under Section 80C of the Income Tax Act. You can invest a maximum of Rs 1.5 lakh in NSC in a financial year to avail of tax benefits.
Account opening for children: NSC accounts can also be opened in the name of children. If the child is under 10 years of age, the account can be opened on behalf of the parents in the child's name. At the age of 10 years, the child can operate the account independently, while as an adult, the child will gain full responsibility for the account. Additionally, an individual of 18 years or older can invest in NSC on their behalf or on behalf of a minor. The account can also be opened as a joint account in the name of three adults.
Lock-in period: NSC has a lock-in period of 5 years, and you cannot withdraw your investment before the lock-in period ends. The interest rate is currently 7 per cent annually, and using the Rule of 72, your investment will take 10 years and 2 months to double.
Considerations before investing: If you invest in this scheme, you cannot withdraw the interest received during the maturity period. Moreover, the lock-in period of 5 years means you cannot withdraw your money before 60 months. Therefore, the NSC scheme is not suitable for those looking to invest for 1-2 years.
Read more: LIC Policy: Invest Rs 166 per day and get up to Rs 50 lakh on maturity
