5 year FD is called Tax Free FD. Many people invest in this FD to save tax. But there is a scheme of Post Office which will save your tax and can also give you better interest than 5 year FD. We are talking about National Savings Certificate of Post Office, this is also a deposit scheme like FD in which money is deposited for 5 years. At present, interest is being given in this scheme at the rate of 7.7 percent. Know here the special things related to this scheme.

First know where and how much interest is being received on Tax Free FD?

• Post Office – 7.5%
• State Bank – 6.5%
• Punjab National Bank – 6.5%
• Bank of India – 6.5%
• HDFC – 7%
• ICICI – 7%

You can also invest in NSC in the name of your child.

Any Indian citizen can invest in Post Office National Savings Certificate. If you want to open an account in the name of your child, then you can also open it. At the same time, a child above 10 years of age can also buy NSC in his own name. Two to three people can also open a joint account.

How much can you invest?

You can invest minimum Rs 1000 in NSC and thereafter in multiples of Rs 100. There is no limit on maximum investment. This scheme matures in just 5 years. Interest is compounded on annual basis and guaranteed returns are available. The interest rate for 5 years is calculated according to the interest rate applicable at the time of your investment. Even if the interest rate changes in the meantime, it does not affect your account.

Get tax exemption
Tax exemption is available under Section 80C on the amount deposited in NSC, that is, tax exemption can be availed on deposits up to Rs 1.50 lakh every year. However, unlike other schemes, no partial withdrawal can be made in this scheme before 5 years. Meaning, you will get the entire amount at once only after 5 years. Premature closure can also be done only in special situations like-

• On the death of any or all the account holders in a single account or joint account
• On seizure by the mortgagee being a Gazetted Officer.
• On the orders of the court.

Extension rules
If you want to continue NSC for the next 5 years even after maturity, then you have to apply again for it. In such a situation, it will be considered as a deposit of the new date and the benefit of interest on it will also be available as per the interest of the new certificate taken on that date.

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The specialty of this small savings schemes is that lump sum investment has to be made in it and there is no maximum limit. As much as the investor wants, he can deposit money in this government scheme. There is also a facility to open multiple accounts in NSC. Also, tax deduction up to Rs 1.5 lakh can be availed under section 80C of income tax on deposits.

If you deposit ₹ 5 lakh, you will get ₹ 6.95 lakh

The Post Office’s National Savings Certificate (NSC) scheme is currently earning interest at the rate of 6.8 per cent per annum. According to the NSC Calculator, if a lump sum amount of Rs 5 lakh is deposited in this scheme, then a total of Rs 6,94,746 will be received on maturity after 5 years.

In this, there will be a guaranteed income of Rs 1,94,746 from interest. The compounding of interest is done on an annual basis but it is paid only on maturity. The maturity of this scheme is 5 years. Investment in National Savings Certificate (NSC) can be done from any post office where the facility of opening savings account is available.

Account can be opened with ₹ 1,000

NSC account opens with a minimum of Rs 1000. At the same time, the maximum limit of investment in this is not fixed. You can deposit in the scheme in multiples of Rs.100. Investment in this is completely safe. Market risk has no effect on it. NSC account can be opened in any post office branch across the country. Any adult can open an account. In this, apart from joint account, parents or legal guardian of children above 10 years of age can buy certificate.

Can’t withdraw in NSC before 5 years. There is an exemption only in certain circumstances. The government revises the interest received on the Small Savings Scheme after 3 months. NSC is accepted by all banks and NBFCs as collateral or security for loans. The investor can nominate any member of his family as a nominee.

The post Post Office’s Dhansu scheme, depositing ₹ 5 lakh will get ₹ 6.95 lakh; Also ₹ 1.5 lakh tax deduction, details first appeared on Rightsofemployees.com.