Indian citizens are familiar with India Post from childhood. It was the only means of communication for millions of people and it has now become a popular financial service provider in the country. Since September 1, 2018, India Post operates IPPB (India Post Payments Bank) nationwide. It is a 100% government owned bank which has licensed nearly about 17 crore postal savings bank accounts with the IPPB. This bank provides a range of financial services to Indian citizens including account services, QR code payment services, UPI (unified payment interface), NEFT (national electronic funds transfer), IMPS (immediate payment service) , Real-Time Gross Settlement, Bharat Bill Payment, DBT (Direct Benefit Transfer) etc. thanks to its vast network of post offices and e-banking. Now it comes to the spread and reach of the IPPB. If you are considering a safe investment, start banking with IPPB. The Post offers many savings plans that will help you save your money and earn money as you invest it. For income taxpayers, the NSC (National Savings Certificate) is a popular investment option. Let’s get to know more about this investment program as described by the India Post.
National Savings Certificate (NSC):
As stated earlier, this scheme is very popular among taxpayers. Many people might not be aware of such a system which offers a safe and convenient way to invest their hard earned money.
Investment term:
The NSC has a definite period, i.e. 5 years according to the 8th edition.
Interest rate:
If you invest in NSC, you will get 7.9% (from July 1, 2019) per year and it will be capitalized annually. However, it is payable after maturity.
Minimum and maximum balance limit:
A minimum of Rs. 1000/- and multiples of Rs. 100/- can be invested for NSC. There is no maximum investment limit. Previously, a certificate was issued and nowadays (from July 1, 2016) a passbook is issued for the NSC account.
Who can open an NSC account?
The following people can open an NSC account at IPPBs and post offices
1. On behalf of a minor, an adult can open an account
2. Minors over 10 years old can open an account
3. A mentally ill person can also open an account with the help of a guardian
4. A single adult can open an account
5. A joint type ‘A’ account with a maximum of 3 adults can be opened (in this case the amount is payable to both)
6. A type ‘B’ joint account with a maximum of 3 adults can be opened (in this case the amount is payable to one or the other)
Scope of the income tax reduction:
If you are a taxpayer, you may be looking for sources where you can invest and get a tax refund at the same time. NSC is here for you. It falls under article 80C of the computer law. Your NSC deposits qualify for a tax refund, but remember to calculate the total amount of your 80C investments. According to 80C, you can only invest a maximum of Rs. 1,50,000/-.
Transfer of NSC from one person to another:
Yes it’s possible. CNPs after opening can only be transferred to another person once from the date of opening until the expiry date. In this case, the old name will be rounded off by post and the new name of the holder will be entered in the booklet following other procedures and formalities.
How does the money grow from this investment?
Although there is an interest rate of 7.9% for the NSC, you may be looking for a real calculation that shows that your money is growing and after 5 years you get as much as your investment from this scheme. Let’s do a calculation for the value of Rs. 70,000/-
NSC calculation:
Basic investment amount – Rs. 70,000/-
Interest provided by IPPB – 7.9% per annum, compounded annually
Investment term – 5 years
Based on the details above, let’s calculate and see how much you will get after 5 years.
Year——-Interest for the year—–Total interest —–Total balance for the year
1st————-5,530.00—————-5,530.00—————–75,530.00
2nd————5,966.87—————-11,496.87————- —81,496.87
3rd————6,438.25—————-17,935.12—————-87,935.12
4th———–6,946.87—————-24,882.00—————-94,882.00
5th————-7,495.68—————-32,377.68————- —102,377.68
At maturity, the amount Rs. 70,000/- becomes Rs. 102,377.68/-. This means a total amount of Rs. 32,377.68 is your profit on the investment of seventy thousand rupees. In addition, you benefit from the tax rebate on the basic investment amount for the 1st year. Isn’t that a good investment plan? I hope this article helps Indians who are planning for a long term investment and good returns over a period of five years. As India Post is a government entity, it is 100% safe and secure.
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