The rate of interest on the NSC is set and revised by the Government Of India per year on April 1 for the fiscal year.
Currently, from the April 1, 2020, interest for the National Saving Scheme is 6.8% per annum.
Previously NSC came in two versions, the NSC VIII issue for 5 years and the NSC IX issue for the 10 years. But from the December 2015 NSC IX issue is discontinued.
So now only NSC VIII exists, which comes with the 5 years of maturity and currently offering interest of 6.8% per year.
Tax On Interest On Maturity
NSC is the tax-saving investment where investors can save tax up to 1. Lakhs under section 80c of the Income Tax Act.
Also, investors can claim for tax benefits on the interest on investment for the first 4 years.
But on maturity, investors have to pay tax on the interest earned on the investment as per he/she tax slab, and the original investment will remain tax-free.
So in this case, they have the option of reinvestment, which leads them to two options.
Investors can withdraw the original investment and can reinvest the interest in NSC so they can claim tax benefit on it.
Investors do not withdraw anything, so in this case, he/she will get simple interest at the rate of post office saving account for the next two years from the date of maturity. After two years, there will be no interest.
Interest On Premature Withdrawal
NSC does not allow premature withdrawal except for exceptional cases.
Below are the cases where Premature withdrawal is allowed
- Death of account holder or holders (Joint Account).
- Forfeiture of a pledgee being a Gazetted government officer when pledge conforms to the rules.
- When court order.
If the request for premature withdrawal is within 1 year, then there will be no interest paid.
If the request for premature withdrawal is later than 1 year, but before maturity, then it can get interest at a discounted rate.
What Other Options Than Premature Withdrawal?
If you have the urgent requirement of cash, then you have the option to get a loan against your NSC.
So this way, your urgent cash requirement issue can be solved, and your investment will also be secure.
How To Calculate Interest On NSC?
You can use our NSC Calculator to find the 100% accurate interest on your NSC investment on maturity. So this way, you will be aware of all of your numbers.
How To Use NSC Calculator
Just fill these required informations
- Amount Invested: Amount which you want to invest
- Rate Of Interest: Set the rate of the interest, which is currently 6.8
- Tenure: Add Maturity period, which is 5 years
Once you add all of the information, our tool will automatically give you the final Maturity Amount.
Let’s take an example.
- Amount of investment: 100,200
- Rate Of Interest: 6.8%
- Year: 5
- Compound: Half Years