Know all about National Saving Certificate

 

National Savings Certificate is an Investment alternative developed by Government of India with an intention to induce persons to a saving habit and to develop National Savings. National Savings Certificate is issued through Post Offices; they are the nodal agency which makes it available to the common public.

National Saving Certificates in India is ranked as ‘highly secured’ in the class of Investments. It is an Investment’ which has Tax Advantage while

(i)                Investing,

(ii)               During the life and

(iii)              At the time of maturity of the Investment.

 

Where is NSC available?

Answer: the NSC is Available for purchase/issue at all Post Offices in India.

 

Who can purchase NSC?

Answer: The NSC is being purchased by the following persons-

  • An adult in his own name or on behalf of a minor,
  • A minor,
  • A trust,
  • Two adults jointly,
  • Hindu Undivided Family.

 

What is the Minimum Purchase Value under NSC?

Answer: The minimum amount of investment under NSC is Rs. 100/-

 

What is the limit of investment in NSC?

Answer: There is no maximum Limit for Investment in NSC. Certificates can be kept as collateral security to get loan from banks. Investment up to INR 1, 50,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act. 

 

To whom the NSC Viii will be issued and what is the provision?

Answer. TheNSC VIII will be issued to-

·         Scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses.

·         No maximum limit for investment.

·         No Tax deduction at source.

·         Certificates can be kept as collateral security to get loan from banks.

·         Investment up to INR 1, 00,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act.

·         Trust and HUF cannot invest.

·         Rate of interest 8.50%.

·         Maturity value of a certificate of INR.100/- purchased on or after 1.4.2012 shall be INR. 151.62 After 5 years.

Buy National Savings Certificates (NSCs) every month for Five years – Re-invest on maturity and relax - On retirement it will fetch you monthly pension as the NSC matures.

 

 

What is the provision for issuing NSC IX?

Answer: This issue has been discontinued since 20th December 2015.

There is no maximum limit for investment. INR. 100/- grows to INR 234.35 after 10 years. Minimum investment is INR. 100/-. The instrument is available for investment in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-. A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor. Rate of interest effective from 1st April 2013 is 8.80% which was revised on 26th March 2013 from 8.9% which was effective from 1st April 2012.

 

What is the interest rate for NSC and what is the maturity period of NSC?

Answer: the interest rate on NSC is almost at par with the interest rates on other fixed income earning instruments like, PPF, tax saving fixed deposit etc. the interest rate on NSC is compounded half yearly and is announced by the government every year before 1st April and they keep on changing every year.

There are 2 issues of NSC currently in operation and the interest rate on these national savings certificate is as follows-

Particulars

NSC (VIII issue )

NSC ( IX issue )

Maturity period*

5 year

10 year

NSC interest rate ( wef 1st April 2013)

8.5%

8.8%

 

 

Does the Nomination / Transfer facility is available on NSC?

Answer: Yes, earlier the smaller duration issues were of 6 years but from 1st December 2011, this has been reduced to 5 years.

 

Does interest on NSC is liable to tax?

Answer: yes, the interest but such interest shall be reflected in the income tax return of the individual. Interest on NSC is liable to tax as per income tax slabs of the individual. However, no TDS is deducted.

 

Does the interest on NSC is being paid to the account holder?

Answer: No, although this interest on NSC is taxable, this interest is not paid to the account holder but is reinvested in NSC. As this interest is re-invested in NSC which is a specified instrument u/s 80C, a taxpayer can claim this amount of interest as a tax deduction under section 80C.

 

What is the premature encashment of NSC?

Answer: Premature encashment of the certificate is not permissible except at a discount in the case of death of the holder(s), forfeiture by a pledgee and when ordered by a court of law.

 

Where the NSC is encashed /discharged on maturity?

Answer: The NSC can be encashed /discharged at the post office where it is registered or any other post office.

 

What are the different types of NSCs?

Answer: NSCs are available for two durations - 5 years (NSC VIII Issue) and 10 years (NSC IX Issue). For both durations, there are three different types of NSC certificates.

  • Single Holder Type Certificate can be taken by individuals either in their own name or the name of a minor.
  • Joint A Type Certificate can be taken by two adults who are joint holders of the certificate, and the withdrawal amount will be paid to both of them jointly.
  • Joint B Type Certificate is available for two adults who are joint holders, and the withdrawal amount can be paid to either one of them.

 

 

When is Duplicate NSC issued?

Answer: If the Certificate is lost, stolen, destroyed, mutilated or defaced, the rightful owner of such certificate may apply for the issue of a duplicate certificate in the specified form (NC29) to the post office where the certificate is registered or to any other post office which shall forward the request to the post office from where the certificate has been issued.

 

What are the ways to redeem of National Saving Certificate in India?

Answer: Well as you have NSC bond(s) which is/are near to maturity, so now you just need to visit your local post office and collect a maturity bond/ redemption form and complete the procedure accordingly. You can get complete procedure written on the form else can consult the department (Post Office) if you want. Second, can visit to the website India Post | Financial Services | POSB | National Savings Certificates (NSC) where you can also get the information and procedure to follow in this regard the attribution  for Withdrawal of NSC from a different city.

 

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    I hope by reading this article you got enlighten on ,Why to invest in National Saving Certificate ?Where is NSC available?, Who can purchase NSC?, What is the Minimum Purchase Value under NSC?, What is the limit of investment in NSC?, To whom the NSC Viii will be issued and what is the provision?, What is the interest rate for NSC and what is the maturity period of NSC?, Does the Nomination/Transfer facility is available on NSC?, Does interest on NSC is liable to tax?, Does the interest on NSC is being paid to the account holder?, What is the premature encashment of NSC?, Where the NSC is encashed /discharged on maturity?, What are the different types of NSCs?, When is Duplicate NSC issued?, Why to invest in National Saving Certificate ?, further to mention before taken any financial decision based on this content it is prefered to take an expert opinion as matter can be subjective.