Post Office NSC : The National Savings Certificate (NSC) scheme by India Post has become one of the most preferred small savings options in 2025, especially for risk-averse investors. With guaranteed returns and tax-saving benefits, NSC is now offering an opportunity to grow your investment into ₹7.24 lakh in just 5 years. But how much should you deposit to reach this amount? Let’s break it down in a detailed and easy-to-understand format.
What is NSC (National Savings Certificate)?
NSC is a fixed income savings scheme offered by the Government of India, primarily through post offices. It is suitable for individuals who want assured returns and tax benefits under Section 80C of the Income Tax Act. The current NSC scheme comes with a 5-year lock-in period and a competitive interest rate.
Key Highlights:
- Backed by the Government of India – no risk of capital loss
- Lock-in period of 5 years
- Compounded annually but paid at maturity
- Current interest rate: 7.7% (as of April 2025)
- Minimum investment: ₹1,000 (no maximum limit)
Available at all India Post branches
NSC Investment : How to Get ₹7.24 Lakh in 5 Years?
To accumulate ₹7.24 lakh at the end of 5 years through NSC, one must understand how compound interest works. The interest in NSC is compounded annually and reinvested until maturity.
Let’s understand the required investment through a detailed table.
Required Investment to Get ₹7.24 Lakh After 5 Years
| Target Amount (₹) | NSC Interest Rate | Investment Duration | Required Deposit Today (₹) | Total Return After 5 Years (₹) |
|---|---|---|---|---|
| 7,24,000 | 7.7% p.a. | 5 Years | 5,00,000 | 7,24,000 |
| 5,00,000 | 7.7% p.a. | 5 Years | 3,45,700 | 5,00,000 |
| 2,00,000 | 7.7% p.a. | 5 Years | 1,38,300 | 2,00,000 |
| 1,00,000 | 7.7% p.a. | 5 Years | 69,100 | 1,00,000 |
| 50,000 | 7.7% p.a. | 5 Years | 34,550 | 50,000 |
| 25,000 | 7.7% p.a. | 5 Years | 17,275 | 25,000 |
| 10,000 | 7.7% p.a. | 5 Years | 6,910 | 10,000 |
So, to get ₹7.24 lakh at maturity, you will need to invest approximately ₹5 lakh today.
Why NSC is Popular Among Middle-Class and Salaried Individuals
Many middle-class families prefer NSC for its simplicity, safety, and tax benefits. Here’s why it continues to attract investors:
- No market-linked risk – ideal for conservative investors
- Assured returns with compounding benefit
- Tax deduction under Section 80C up to ₹1.5 lakh per year
- Can be used as collateral for loans from banks
- Transferable between post offices
Comparison of NSC with Other 5-Year Investment Options
| Investment Option | Interest Rate (April 2025) | Tax Benefit | Risk Level | Lock-in Period |
|---|---|---|---|---|
| NSC (Post Office) | 7.7% | Yes | Very Low | 5 Years |
| 5-Year Bank FD | 6.5%-7.1% | Yes | Low | 5 Years |
| PPF | 7.1% | Yes | Very Low | 15 Years |
| Mutual Funds (ELSS) | Varies (10-14%) | Yes | Moderate/High | 3 Years |
| Senior Citizens Savings | 8.2% | Yes | Very Low | 5 Years |
Step-by-Step Guide to Invest in NSC Online or Offline
- Visit the nearest post office or India Post Payments Bank (IPPB) website.
- Fill out the NSC application form with accurate details.
- Submit KYC documents (Aadhaar, PAN, photograph).
- Choose payment method – cash, cheque, or UPI.
- Collect the NSC certificate digitally or in physical format.
- Track your investment using the India Post or IPPB portal.
Taxation Rules on NSC Returns
- NSC interest is taxable, but the reinvested interest for the first 4 years qualifies for deduction under Section 80C.
- The final year’s interest is taxable under ‘Income from Other Sources’.
- No TDS is deducted on NSC interest.
Benefits of Choosing NSC Over Recurring Deposit or FD
- Compounded interest earns more than simple interest from RD
- Fixed return despite market fluctuations
- Eligible for loans, unlike recurring deposits in many banks
Government-backed – zero default risk
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Real-Life Example: How NSC Helped a Family Achieve a Financial Goal
Ramesh, a school teacher from Uttar Pradesh, invested ₹5 lakh in NSC in April 2020. In April 2025, he received ₹7.24 lakh, which he used to fund his daughter’s engineering education. The predictable maturity amount helped him plan without worrying about market ups and downs.
Key Tips for Investors Planning to Invest in NSC in 2025
- Start early in the financial year to avail full 80C benefit.
- Invest in lump sum to maximize compounding benefits.
- Use NSC as part of your diversified portfolio along with equity and PPF.
- Reinvest maturity amount for long-term wealth creation.
Frequently Asked Questions (FAQs)
Q1: Can I break NSC before 5 years?
No, premature withdrawal is not allowed except in case of death of the holder or by court order.
Q2: Is NSC better than PPF?
PPF has a longer lock-in of 15 years but offers tax-free interest. NSC is ideal for medium-term goals.
Q3: Is NSC safe?
Yes, it is backed by the Government of India and considered one of the safest investment instruments.
The Post Office National Savings Certificate is an ideal tool for safe investment with steady returns. If you’re planning for medium-term goals like children’s education, home renovation, or saving for future expenses, investing ₹5 lakh today can give you ₹7.24 lakh in just 5 years. With its tax benefits and guaranteed returns, NSC stands out as a powerful addition to your financial strategy.
The NSC interest rate and calculations mentioned above are based on the April 2025 rate of 7.7% and may change in future. Please consult the official India Post or financial advisor before making any investment decisions.
How much is the minimum deposit required for a Post Office NSC?
Minimum ₹1,000.
What is the total interest earned from a Post Office NSC in 5 years?
₹2.24 lakh
What is the average yearly return rate for a Post Office NSC?
Approximately ₹28,800 per year for 5 years.
