Risk-averse investors looking for better yields from their fixed-income instruments can now rejoice as the government has hiked the interest rate on National Savings Certificates (NSCs) to seven percent for the January-March quarter from the earlier stipulated 6.8 percent.
The NSC, a dependable savings product provided by the Indian Post Office, is popular among investors as a low-risk investment option. An adult, a minor, or a trust can open an NSC.
The government’s regularised interest rate on the National Savings Scheme allows an individual to generate a guaranteed return on the NSC. The NSC pays a quarterly fixed interest, thereby, ensuring a consistent income for the investor.
Other than the relatively high interest rate, people park money in NSC to avail of the tax benefits up to ₹1.5 lakh under Section 80C of the Income Tax Act, 1961. The NSC comes with a fixed maturity time of five years.
Another benefit of investing in the NSC scheme is that banks and NBFCs accept this instrument as a security or collateral from investors applying for secured loans. However, to accomplish this, the certificate should be transferred to the bank and stamped with a transfer stamp by the responsible post office.