Post Office NSC Plan – In a time when safe and high-return investments are rare, the National Savings Certificate (NSC) offered by India Post has emerged as a popular choice for risk-averse investors. Backed by the Government of India, the NSC scheme not only assures guaranteed returns but also offers attractive tax benefits under Section 80C. This article breaks down the key features, eligibility criteria, interest earnings, and how you can earn up to ₹72 lakh through strategic investments in the NSC scheme over five years.
What is the Post Office NSC Plan?
The Post Office NSC is a 5-year, government-backed savings scheme offering 7.7% annual interest with tax benefits under Section 80C. It’s a safe investment option with guaranteed returns. The National Savings Certificate (NSC) is a fixed-income investment scheme initiated by the Government of India and available at all post offices. It is specifically designed for small to medium investors looking for a low-risk, tax-saving option with steady returns.
Key Features of NSC:
- Guaranteed returns backed by the Government of India
- Fixed maturity period of 5 years
- Currently offers an interest rate of 7.7% p.a. (as of Q2 FY2025)
- Interest is compounded annually but payable at maturity
- Tax benefit under Section 80C of the Income Tax Act, up to ₹1.5 lakh
How to Earn ₹72 Lakh from NSC in 5 Years?
To earn ₹72 lakh from NSC in 5 years, invest around ₹50 lakh at the current 7.7% interest rate. With annual compounding, the amount grows to over ₹70.8 lakh by maturity—making it a safe, high-return option for large investments. Although the NSC does not offer ₹72 lakh on a single investment alone, strategic and bulk investments can help build a substantial maturity corpus. The table below shows how multiple investments in the NSC scheme can grow over five years.
Investment Growth Table – 7.7% Annual Interest, Compounded Annually
| Investment Amount | Yearly Interest | Total Interest in 5 Years | Maturity Amount |
|---|---|---|---|
| ₹1,50,000 | ₹11,550 | ₹62,410 | ₹2,12,410 |
| ₹5,00,000 | ₹38,500 | ₹2,08,033 | ₹7,08,033 |
| ₹10,00,000 | ₹77,000 | ₹4,16,066 | ₹14,16,066 |
| ₹20,00,000 | ₹1,54,000 | ₹8,32,132 | ₹28,32,132 |
| ₹25,00,000 | ₹1,92,500 | ₹10,40,165 | ₹35,40,165 |
| ₹35,00,000 | ₹2,69,500 | ₹14,56,231 | ₹49,56,231 |
| ₹50,00,000 | ₹3,85,000 | ₹20,80,330 | ₹70,80,330 |
NSC Interest Rate and Compounding Explained
The NSC interest rate is revised quarterly by the Ministry of Finance. As of Q2 FY2025, the interest rate is 7.7% per annum.
- Compounding Frequency: Interest is compounded annually and paid out only at the end of the 5-year maturity period.
- Fixed Rate: Once purchased, the interest rate remains fixed for the entire 5-year period.
Sample Calculation for ₹1.5 Lakh Investment:
| Year | Principal + Accrued Interest |
|---|---|
| 1 | ₹1,61,550 |
| 2 | ₹1,74,002 |
| 3 | ₹1,87,401 |
| 4 | ₹2,01,800 |
| 5 | ₹2,12,410 |
Who Can Invest in NSC?
The NSC scheme is open to all Indian citizens and offers flexible investment options starting from as low as ₹1,000. Joint accounts are also allowed.
Eligibility Criteria:
- Must be a resident Indian (NRI not eligible)
- Minimum investment: ₹1,000 (no upper limit)
- Joint holding allowed (up to 3 individuals)
- Available for adults and minors (through guardians)
Benefits of Investing in NSC
Investing in NSC not only provides fixed returns but also ensures safety and flexibility. Here are the primary benefits:
- Guaranteed Returns: Backed by the Government of India
- Tax Deduction: Up to ₹1.5 lakh under Section 80C
- No TDS Deducted: Unlike FDs, NSC does not attract TDS at maturity
- Collateral for Loans: Can be used as a security to avail loans from banks
- Transferable: From one person to another in case of death or by court order
How to Apply for NSC – Step-by-Step Process
You can apply for NSC online (via India Post Payment Bank app/website) or offline through your nearest post office.
Offline Application:
- Visit your nearest post office.
- Fill out the NSC application form.
- Submit KYC documents: Aadhaar, PAN, and address proof.
- Deposit the amount through cash, cheque, or demand draft.
- Get the NSC certificate (physical or e-mode).
Online Application (through IPPB):
- Login to your IPPB account
- Choose NSC from savings products
- Enter investment amount and nominee details
- Complete payment
- Download e-certificate
NSC vs Other Saving Schemes
| Feature | NSC | Bank FD | PPF | KVP |
|---|---|---|---|---|
| Interest Rate | 7.7% | 6.5%-7.0% | 7.1% | 7.5% |
| Lock-in Period | 5 Years | 1-10 Years | 15 Years | 10 Years |
| Tax Benefit | Yes (80C) | Yes (80C) | Yes (80C) | No |
| Risk Level | Low (Govt-backed) | Low | Low | Low (Govt-backed) |
| Loan Facility | Yes | Yes | Limited | Yes |
| TDS Deducted | No | Yes | No | No |
The Post Office NSC scheme stands out as a safe, government-backed, and tax-saving investment plan ideal for risk-averse investors. With its attractive 7.7% interest rate, guaranteed returns, and tax exemptions, NSC offers a strong opportunity to grow your wealth steadily over five years. With strategic bulk investments, one can easily accumulate ₹72 lakh or more upon maturity.
FAQs about Post Office NSC Plan
1. Can NRIs invest in the Post Office NSC scheme?
No, the NSC is only available to resident Indian citizens.
2. Is NSC interest taxable?
Yes, the interest earned is taxable, but it qualifies for deduction under Section 80C if reinvested.
3. Can I withdraw NSC before 5 years?
Premature withdrawal is allowed only in case of death of the holder or under a court order.
4. Is there a maximum investment limit in NSC?
There is no maximum cap; you can invest any amount in multiples of ₹1000.
5. Can I transfer my NSC to another person?
Yes, NSC can be transferred in case of death of the holder or with court permission.