Are you investing in saving tax? There are several options you can choose from under section 80c. For example, you can invest in National Savings Certificates NSCs. An initiative by the Indian government to encourage savings among resident Indians. NSC investments are eligible for section 80c tax deductions up to Rs 1.5 lakhs. You can calculate the interest earned by using the NSC interest rate calculator.
The following are the exact formulas that allow you to calculate the investment exactly when using National Savings Certificates, where the maturity of 5 years or 10 years provides tax benefits and interest on the amount deposited.
A person can calculate the total amount earned from interest by filling in the required details and then using this formula to determine the interest earned once the investment has reached maturity.
What is the National Saving Certificate (NSC)?
This scheme offers fixed income through National Savings Certificates. National Savings Certificates are popular savings instruments in India. You can get them from any Post Office. NSC scheme is a Government of India initiative. Hence it guarantees returns. The savings bonds encourage small and middle-class investors to save. These investors can also obtain tax benefits.
NSC investments up to Rs 1.5 lakhs are exempt from tax under Section 80C of the Income Tax Act. NSC investments are locked in for five years before they can be sold. NSC certificates earn fixed interest. The current rate of interest is 6.8%. Like PPFs and FDs from the Post Office, NSCs are secure and low-risk investments. The minimum deposit is Rs 100. NSCs do not have a maximum limit for investment. Investing in NSCs does not attract tax deductions.
How to Buy a National Saving Certificate (NSC)?
The investor needs to visit the nearest Post Office to purchase an NSC scheme. Identification and address proofs must be presented in the original. Investing in NSC can be accomplished by following the below steps:
- Fill out the application form with all the required information.
- You will be required to provide an ID and an address for verification.
- The investor can pay the investment amount in cash, demand drafts, or a personal check made out to the postmaster after verifying the documents.
- In order to conclude this process, choose a nominee, and have a witness sign the document.
NSC can only be invested in by individuals residing in India. A savings plan is not available to non-resident Indians, Hindu United Families (HUFs), and trusts.
National Savings Certificate Calculation (NSC Calculator Formula)
- NSC Maturity Value = P*(1+r/200)2n
- P= Investment Amount
- r= Interest Rate
- n= Number of Years
Using the above formula, one can find the value of the amount after meeting the full interest and the principal amount invested.