Do you want an investment that is completely safe and also gives good profits? Post office small savings schemes are the first choice of millions of people in India. These have full guarantee from the government, so there is no fear of market fluctuations. One of these schemes is National Savings Certificate (NSC), which shines like gold for ordinary investors. Let us know how this scheme works and why it can be perfect for you.

What is NSC and why is it so popular?

NSC is a fixed income scheme of the post office, which has been running since the 1980s. It is designed for those who want better returns than bank FD, but do not want to take the risk of stock market. Finance expert Dr Rakesh Sharma (fictitious name, but based on the opinions of real experts) says, “Government schemes like NSC are ideal for the middle class as the capital is completely safe here and the interest rates are not affected by the market.” Every year crores of rupees are invested in NSC in India, especially in the tax saving season.

How to make millions with 7.7% interest?

NSC currently offers 7.7% annual interest, which increases every year through compounding. Meaning, the interest of the first year gets added to the principal amount of the next year and earns new interest. This process continues for 5 years.

Suppose you invest Rs 11 lakh in lump sum. If calculated using compounding formula (A = P(1 + r/n)^(nt)):

• Principal amount: ₹11,00,000


• Interest rate: 7.7% (annually)


• Duration: 5 years


• Maturity amount: Approximately ₹15,93,937

Here the interest share is around ₹ 4,93,937. That means your investment becomes one and a half times in 5 years! If you increase the investment every year, the returns can be higher. Data shows that the average returns of NSC in the last 5 years have been 1-2% higher than bank FD.

How to get started: Minimum investment and flexibility

The specialty of NSC is that it is for every budget. An account can be opened with just Rs 1,000, and there is no upper limit. You go to the post office, fill the form, complete KYC and invest through cash or cheque. NSC can also be opened in the name of children, which is a good plan for their future. Experts advise to start with a small amount and keep adding every month like a SIP.

5 year lock-in: Patience pays off

The maturity of the scheme is 5 years. During this period, if you withdraw money, you will get only the principal amount and not interest. But on completion of the entire period the entire amount comes together. This rule inculcates the habit of investors to save for a long time. Impact? Perfect for retirement planning or children’s education. If there is an emergency, compare with other schemes like PPF.

Double benefit of tax saving

NSC helps not only in returns but also in taxes. Investment up to Rs 1.5 lakh every year is eligible for deduction under Section 80C. That means your taxable income reduces and savings increase. Example: A person in 30% tax bracket can save tax up to Rs 45,000 on an investment of Rs 1.5 lakh. But interest on maturity is taxable, so keep this in mind while filing ITR.

Why choose NSC? Real benefits and effects

With today’s inflation (about 5-6%) a return of 7.7% gives a real gain. This is a must for those who want risk-free income – such as senior citizens, government employees or first-time investors. In the long run this can become a stepping stone to becoming a millionaire. But remember, interest rates are reviewed every quarter, so check the latest. NSC not only raises money but also teaches financial discipline.