National Savings Certificate (NSC) The scheme is available in all post offices and is promoted by Government of India. Since the scheme is backed by Government of India, the risk is considered as very low.
National Savings Certificate (NSC) The scheme is applicable only for Indian citizens and is not applicable for Non-Resident Indians (NRIs) and a HUF. Due to income tax benefits, low minimum investment requirement and low risk, the National Pension Scheme is gaining popularity.
|Rate of interest||6.8% per annum|
|tax benefits||Under Section 80C of the Income Tax Act|
National Savings Certificate The scheme is available in all NSC post offices and the Government of India promotes the NSC scheme. Due to the number of post offices present in India and easy access to these post offices, this scheme has become very popular in India.
National Savings Certificate The main objective of the scheme is for individuals to make small or medium savings, and tax benefits are provided for these savings. Since this scheme is promoted by the Government of India, the investment risks in this scheme are low.
This scheme was primarily launched for individuals, so Non-Resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not eligible to opt for this scheme. Only Indian citizens will be able to invest in NSC scheme.
National Savings Certificate Benefits:
Given below are the eligibility criteria for investors to buy NSC:
1. The person must be an Indian citizen.
2. There is no age limit for individuals to purchase the certificate.
3. NRIs cannot invest in NSC.
4. Can be invested with another adult or individuals can buy NSC on behalf of a minor.
5.Under NSC VIII issue, HUF and Trust are not eligible to invest in this scheme.
NSC Features | National Savings Certificate Features :
The salient features of the National Savings Certificate Scheme are mentioned below:
Minimum Investment: The minimum amount for which a certificate can be purchased is Rs 100. The different denominations that can be bought for the certificate are Rs 10,000, Rs 5,000, Rs 1,000, Rs 500 and Rs 100. Initially, small investments can be made, and individuals can increase investments when possible.
Maturity Period: 5 years and 10 years are the two maturity periods of this plan that individuals can choose from.
Rate of interest: Currently, the interest rate has been reduced from 7.9% to 6.8%. And it is compounded on an annual basis. However, interest is payable only on maturity. For example, on an investment of Rs 100, the subscriber will get Rs 146.93 after 5 years of investment.
Enrollment: Family members including minors can be added as nominees by the investor. If the investor dies during the tenure of the plan, the nominee will be able to inherit the plan.
Different Types of National Savings Certificate: Initially, there were two types of certificates available NSC IX marks and NSC VIII marks. However, till December 2015, the Government of India had stopped the NSC IX issue. Hence, only NSC VIII marks are available.
Loan Against NSC: NSCs can be used as security or collateral and can be provided to banks to obtain loans. However, the concerned Post Master has to authorize the transfer of the certificate to the bank.
Purchase of NSC: On submission of the required documents, the scheme can be purchased at the post offices.
Transfer of Certificate: Transfer of NSC from one post office to another is possible. Transfer of certificates from one person to another is also possible. However, the certificate will remain the same and the name of the new owner will be written on the certificate and the name of the old owner will be rounded off.
Benefits of National Savings Certificate | Advantages of National Savings Certificate:
National Savings Certificate ,The main benefits of investing in NSC are mentioned below:
National Savings Certificate One of the main benefits of investing in investments is the tax benefits that individuals can avail on the investments made by them. Returns are also guaranteed under this scheme. Many individuals prefer the NSC scheme as it can provide regular income after retirement.
The interest generated is tax-free, except for the interest earned in the last year.
If the person loses the original certificate, a duplicate certificate can be obtained.
Even after the maturity period, individuals have the option to continue investing in the scheme.
Transfer of certificate from one person to another is permitted. However, it is allowed only once during the lock-in period.
The interest that is generated is compounded on an annual basis and reinvested in the scheme. Hence without buying the certificate the invested amount of the person increases.
Documents Required for NSC | Required Documents for NSC
Given below are the documents that need to be submitted to buy NSC:
NSC application form has to be submitted.
Investors need to submit an original identity proof such as passport, permanent account number (PAN) card, voter ID, driving license, senior citizen ID or government ID for verification.
The investor has to submit a photograph.
Investors need to submit an address proof such as passport, telephone bill, electricity bill, bank statement along with a check and a certificate. Investors need to submit an address proof such as passport, telephone bill, electricity bill, bank statement along with a check along with a certificate or an ID card issued by the post office.
Tax Benefits Provided by National Savings Certificate:
Given below are the National Savings Certificate tax benefits that individuals can avail by investing in NSC:
Under Section 80C of the Income Tax Act, 1961, tax benefits up to Rs 1.5 lakh can be availed by investing in NSC.
The interest earned on an annual basis by investing in NSC is treated as fresh investment for tax benefits.
Tax Deduction (TDS) on NSC is not applicable under National Savings Certificate. However, tax has to be paid for the interest earned, as per marginal income tax rates.
Maturity Period and Premature Withdrawal under NSC:
In most of the scenarios, the amount invested in NSC cannot be withdrawn before the maturity period of 5 years. However, in some cases, premature withdrawal is allowed. Below are the cases where premature withdrawal is allowed under the NSC scheme:
If the certificate holder dies.
On confiscation of certificate. However, the pledgee should be a gazetted government official.
The amount invested can be withdrawn if ordered by a court of law.
However, there are certain documents to be submitted by the certificate holder for withdrawal of funds. The list of documents to be submitted is given below:
Original National Savings Certificate to be submitted.
NSC encashment form has to be submitted.
proof of identity.
In case of purchase of NSC on behalf of a minor, verification of guardian is mandatory.
If the amount is withdrawn within one year, no interest will be payable. Penalty will also be imposed in case of early withdrawal. The maturity amount is paid by check by the post office.
Procedure to Apply for Duplicate NSC Certificate:
The following steps can be followed to obtain a duplicate NSC certificate:
Complete the application form and submit it at the nearest post office branch. If the nearest branch is not the branch where the original certificate was issued, the application will be forwarded to the parent branch by the new branch itself.
The application form should be accompanied by a statement that includes information such as name, amount, account number and date of issue as well as the reason for the new certificate.
On submission of application and details, your application will be processed by the officer in charge of the post office. You will also have to submit an indemnity bond along with one or more sureties or bank guarantees. There is no need to submit an indemnity bond in case of mutilated or mutilated certificates.
Frequently Asked Questions (FAQ)
1. Are there benefits under Rs 80C for NSC? 1 lakh or Rs. 1.5 lakh?
The benefits provided under section 80C is Rs. 1.5 lakh. The confusion comes when you look at the 80C limit before 2014. Changing the limit to Rs. 1.5 lakh from 2015 and will be subject to change as per the decisions of the Government.
2. Is there a lock-in period with investing in NSC?
Yes, there is a lock-in period which is equal to the maturity period of the certificates. They can be redeemed early but only under specific circumstances.
3. Can the nomination be canceled or changed?
Yes, nomination can be canceled or changed at any time by using Form 3 and paying a nominal fee of Rs.
4. What is the maturity period and rate of interest for NSC Issue VIII?
From 01-04-2013 the maturity period for NSC Issue VIII is 5 years and the NSC interest rate being offered is 6.8% p.a.
5. What is the minimum investment limit in NSC?
The minimum possible investment in NSC is Rs. 100.
6. Can I take a loan against my NSC investment?
Yes. NSCs can be provided as collateral to investment banks and other government organizations to secure any loan.
7. Can a Trust or HUF invest in NSC?
Trusts and HUFs cannot invest in NSC under the terms of issue VIII of NSC