What is National Savings Certificate ? Features & Benefits of NSC
There are many schemes available for saving in our country. Some of these are risky and some are risk-free. Investors take a decision on which schemes to invest in based on the investor’s needs and risk tolerance. For the risk averse there are some schemes that offer guaranteed growth along with guaranteed investment. One of them is National Savings Certificate (NSC). This is a savings scheme offered by the Post Office. This savings scheme account can be opened at any post office in the country. It is a savings scheme that provides fixed income. It is the Government of India
Like Fixed Deposit in Banks, Public Provident Fund Schemes… National Savings Certificate is also a low risk savings scheme. This bond can be purchased for a minor or jointly with an adult. You can start investing with a very small amount. It starts from Rs 1,000. The next amount can be increased by Rs 100. It is available with a tenure of 5 years. There is no upper limit on how much you can invest. But it should be noted that the income tax exemption is only Rs 1,50,000. This exemption is available under Section 80C of the Income Tax Act. The annual interest rate on this certificate is announced by the central government. It currently offers 6.8% annual interest. Since the interest rate is calculated by compound method, the investor gets a larger amount of interest bearing corpus at maturity than the original annual interest rate.
As this scheme is meant for individuals only, Hindu Abhiwajya Families (HUFs) and trusts cannot invest in it. Also, Non-Resident Indians (NRIs) cannot purchase National Savings Certificates. It has the flexibility to select the nominee. Also banks and financial institutions accept this certificate as security. Generally there is a lock in period of 5 years on the investment made in this scheme. That means we can get the invested money including interest only after 5 years. However, the scheme can be withdrawn in case of death of the investor or in exceptional cases like court order.
National Savings Certificate
India, the National Savings Certificate is a fixed-income investment scheme that you can open easily at any post office.
Features & Benefits of NSC
Here are some important features of SC scheme-
- The certificates can earn the annual fixed interest, which is revised every period of quarter by the government, there are by assuring the investor of a regular income.
- The scheme basically consists of 2 types of certificates – NSC VIII issue (5 years tenure) and NSC IX issue (10 years tenure). With the latter discontinued in December 2015, only the form issued is available for subscription.
- As a government-sponsored tax-saving scheme, the principal invested in NSC is entitled under Section 80C of the Income Tax Act to Rs. Rs. 1.5 lakhs annually.
- You will pay maximum Rs. 100 as initial investment
- It can be easily purchased from any post office after submitting the required KYC documents. Also, it is easy to transfer the certificate from one PO to another as well as from one person to another without affecting the interest accrual/maturity of the original certificate.National Savings Certificate
NSC certificates accepted:
- The security for secures loans in banks and NBFCs. In that case, the transfer stamp is placed on certificate and transferred to the bank while issusing the loans.
- The interest earned is compounded annually and reinvested by default but is payable only at maturity.
- An investor can nominate any family member (even a minor) so that they can itnher it in the unfortunate event of the death of the investor.
- The is no TDS on NSD payment but subscribe must pay applicable tax while filing the applicant income tax return his advance
- The interest earned is compounded annually and reinvested by default but is payable only at maturity.
- The investor will receives the allround whole collection of information value on maturity. As there is no TDS on NSC payments, the subscriber has to pay the applicable tax on it while filing his income tax returns or paying his advance tax.National Savings Certificate
Who should invest in NSC?
Similar to some other fixed income instruments like Public Provident Fund and Post Office FDs, NSC offers guaranteed interest and full capital protection. However, they cannot provide inflation-beating returns like tax-saving mutual funds and national pension systems.
- Basically, the government promoted the National Savings Certificate as a savings scheme for Indian individual citizens Eligibility Criteria for NSC
Below is the list of NSC eligibility criteria required to invest in NSCs-
- Hindu Undivided Families , trusts, private and public limited companies are not eligible to allowed invest in NSC.
- The person must be an Indian citizen. Non-resident Indians (NRIs) are not eligible to invest in Nsc
- No age limit for individuals to purchase of a certificate.
How to invest in NSC?
candidate can invest through in NSC through online and offline modes. Here is the process
Steps to Invest in NSC Offline:
Applicant can invest in NSC offline, through follow the listed steps process
Step 1: Collect the NSC application form online or from any post office.
Step 2: Fill the form with entire candiant the details.
Step 3: Submit the form with self-attested copies of required KYC documents.
Step 4: Bring the original documents for verification and pay the amount you wish to invest.
Step 5: After approval, collect the NSC of your application.
Steps to Apply NSC Online:
Step 1: Open Department of Posts (DOP) Net Banking and login.
Step 2: Under the’General Services’,you have to select ‘Service Requests’. in that.
Step 3: Click on ‘New Requests’ and select ‘NSC Account – Open NSC Account (for NSC)’.
Step 4: Enter the deposit amount and select the debit account linked to the PO savings account.
Step 5: Select ‘Click Here’ to run through the terms and conditions. Accept them when done.
Step 6: you have to Enter the transaction password and click on ‘Submit’. button
Step 7: The deposit receipt will be there to view and download.
Step 8: Login and click on ‘Accounts’ to view your NSC account details.
Documents required to apply for NSC
- Passport
- Permanent Account Number (PAN Card)
- Voter ID
- Driving license
- for Senior Citizen they must be carry there ID or Government ID for verification.
- Photograph.
- Address proof like electricity bill, passport, telephone bill, bank statement along with cheque.
- Tax benefits of NSC
- Although there is no upper limit on the purchase of NSCs, under Section 80C of the Income Tax Act, 1961, an annual limit of Rs. Only investments up to 1.5 lakhs can avail subscriber tax savings.
Additionally, the interest earned annually on the NSC for the 1st 4 years is treated as reinvestment (ie. added back to the initial investment) and hence, is also eligible for tax exemption subject to a total annual limit of 1.5 lakhs. However, the interest earned in the 5th year is not reinvested and therefore taxed at the applicable slab rate of the investor.
The NSC interest rate is 7.7%, applicable for current quarter.
Issue of Duplicate National Savings Certificates
If your original NSC certificate is lost, stolen, destroyed, damaged or mutilated, you can request a duplicate.
