The National Savings Certificate (NSC) from India Post has become one of the top choices for small-scale investors in 2025. With its low-risk nature and guaranteed returns, NSC promises a secure way to grow your savings. By investing in this scheme, you can turn your money into ₹7.24 lakh in just 5 years. But how much do you need to invest to reach that target? Let’s break it down clearly.
What is NSC (National Savings Certificate)?
NSC is a government-backed savings scheme available at post offices across India. It offers guaranteed returns and is perfect for those looking for low-risk investments with the benefit of tax savings.
Key Features of NSC:
- Government-backed: No risk of losing capital.
- Lock-in period: 5 years.
- Interest rate: 7.7% per annum (as of April 2025).
- Tax benefit: Eligible for tax deduction under Section 80C of the Income Tax Act.
- Investment amount: Starts from ₹1,000 (no maximum limit).
- Interest payment: Compounded annually and paid at maturity.
NSC is a safe bet for anyone looking for a simple way to save with guaranteed returns.
How to Reach ₹7.24 Lakh in 5 Years?
To achieve ₹7.24 lakh in 5 years, you need to understand how compound interest works in NSC. The interest on NSC is compounded annually and added back to your investment. This helps your investment grow faster over time.
Required Investment to Get ₹7.24 Lakh in 5 Years
Here’s a table showing how much you need to invest at the current interest rate of 7.7% to reach various target amounts at maturity:
| 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 |
To get ₹7.24 lakh in 5 years, an investment of ₹5 lakh today will be required.
Why NSC is Popular Among Middle-Class and Salaried Individuals
NSC is widely preferred by salaried individuals and middle-class families for several reasons:
- No market-linked risk: Ideal for conservative investors.
- Guaranteed returns: Offers fixed returns, irrespective of market fluctuations.
- Tax benefits: Investors can claim tax deductions up to ₹1.5 lakh per year under Section 80C.
- Loan eligibility: Can be used as collateral for loans.
- Transferable: You can transfer your NSC between post offices if needed.
NSC offers simplicity and security, making it a go-to option for risk-averse individuals.
Comparison of NSC with Other 5-Year Investment Options
Here’s a quick comparison of NSC with other popular 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) | 10% – 14% | Yes | Moderate/High | 3 Years |
| Senior Citizens Savings | 8.2% | Yes | Very Low | 5 Years |
While NSC offers a competitive interest rate and tax benefits, it stands out for its low-risk nature, making it ideal for conservative investors.
Step-by-Step Guide to Invest in NSC
You can invest in NSC either online or offline through post offices. Here’s how:
- Visit a Post Office or IPPB website: Locate your nearest post office or visit the India Post Payments Bank (IPPB) website.
- Fill the Application Form: Provide necessary details like name, address, and nominee information.
- Submit KYC Documents: Submit your Aadhaar, PAN card, and a photograph for verification.
- Choose Payment Method: Pay via cash, cheque, or UPI.
- Collect NSC Certificate: You can get your certificate either digitally or physically.
- Track Your Investment: Use the India Post or IPPB portal to monitor your investment.
Taxation Rules on NSC Returns
NSC offers tax benefits under Section 80C, but the interest earned is taxable. Here’s how it works:
- The interest for the first 4 years is reinvested and qualifies for a tax deduction under Section 80C.
- The interest earned in the 5th year is taxable under the head ‘Income from Other Sources’.
- No TDS (Tax Deducted at Source) is deducted on the interest.
Benefits of NSC Over Recurring Deposits and FDs
- Higher returns: NSC offers compounded interest, which is better than the simple interest offered by Recurring Deposits (RD).
- No market risk: Unlike stock-based investments, NSC’s returns are not affected by market fluctuations.
- Loan eligibility: Unlike Recurring Deposits, NSC can be used as collateral for loans.
- Government-backed: NSC is a zero-risk investment since it is backed by the Government of India.
Real-Life Example: How NSC Helped a Family Achieve a Financial Goal
Ramesh, a teacher from Uttar Pradesh, invested ₹5 lakh in NSC in April 2020. By April 2025, his investment grew to ₹7.24 lakh, which he used to fund his daughter’s engineering education. This predictable return allowed him to plan his finances without worrying about market ups and downs.
Moving Forward
The Post Office NSC is an excellent option for safe, long-term savings. Whether you are saving for your child’s education, a home renovation, or other financial goals, NSC offers a reliable way to grow your money. With a current interest rate of 7.7%, you can turn ₹5 lakh into ₹7.24 lakh in 5 years, making it a valuable part of any investment strategy.
Make sure to consult with a financial advisor or visit the official India Post website to stay updated on any changes to the interest rate and investment guidelines before you make your decision.
Mangesh Garg is a passionate writer known for captivating stories that blend imagination and reality. Inspired by travel, history, and everyday moments, He crafts narratives that resonate deeply with readers