5-year post office NSC deposit scheme: How Rs 10,000, Rs 25,000, Rs 50,000 investment grows to Rs 14,490, Rs 36,226, Rs 72,452 on maturity; see examples

Interest rate on 5-year post office National Savings Certificate (NSC) small savings scheme: Currently, National Savings Certificate (NSC), a government-guaranteed small savings scheme, grows your money at 7.7 per cent per annum compounded annually, and comes with a maturity period of five years. This makes it the second-highest interest-paying savings scheme at the post office, after the Senior Citizen Savings Scheme (SCSS) and the Sukanya Samriddhi Yojana, each delivering an 8.2 per cent return compounded quarterly. 

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Here's a list of the top five interest-paying small savings schemes, as of the January-March 2024 quarter, according to the India Post website, indiapost.gov.in: 

The National Savings Certificate is a certificate deposit scheme, which means it works slightly differently from fixed deposits.

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A certificate deposit, also known as a certificate of deposit, is a financial instrument that provides a guaranteed income at the end of the total, pre-defined maturity period. Although premature withdrawals are permitted, they typically attract a penalty in certificate deposits. However, just like fixed deposit schemes, certificate deposit schemes are equally popular among rather risk-averse investors. 

However, investors must note that any premature withdrawal, or a withdrawal before the completion of the full five-year period, is only allowed under certain conditions such as the death of the account holder.

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Hence, the amounts at the end of the first, second, third, and fourth years given above are only to understand how the money grows gradually till the investor reaches the end of the maturity period, and are not the amount the investor gets in case the premature withdrawal option is exercised.   

NSC investment limit

One can start an NSC investment at the post office against a minimum deposit of Rs 1,000, and in multiples of Rs 100, without any upper limit, according to the India Post website. 

Income tax benefit

National Savings Certificate deposits qualify for a deduction in taxable income up to Rs 1.50 lakh a financial year under Section 80C of the Income Tax Act, just like five-year fixed deposits.