National Savings Certificate: Comprehensive Guide to NSC

National Savings Certificates (NSC) is a popular investment option in India that was introduced in 1950. It’s also a government-backed savings instrument, ensuring the safety of your hard-earned money and earn guaranteed returns over a fixed period of time. In this article, we will delve into the details of NSS and how it can prove beneficial for investors.

What is National Savings Certificate (NSC)?

The National Savings Certificate (NSC) is a fixed-income investment option backed by the Government of India. It is available for a tenure of five years, offering attractive interest rates and tax benefits. Issued by the Post Office, NSC can be purchased at any post office across the country.

The NSC scheme was initially launched as a part of the Post Office Savings Bank. However, in 1956, it was transferred to the Ministry of Finance and was made a part of the National Savings Institute.

Over the years, the amount that can be invested in NSC has increased significantly. In 1950, the maximum investment limit was Rs. 10,000, which was increased to Rs. 50,000 in 1986. In 1998, the limit was again increased to Rs. 1,00,000. In 2020, the government increased the limit to Rs. 1,50,000.

Benefits of investing in National Savings Certificate:

• NSC is a government-backed investment, ensuring the safety of your capita
• NSC offers competitive interest rates compared to other fixed-income instruments.
• Tax Benefits: Investment in NSC qualifies for tax deductions under Section 80C of the Income Tax Act, up to ₹1.5 lakhs per annum.
• NSC can be easily purchased at any post office in India.
• The investment can be made in the name of an individual or jointly with another person. The minimum investment amount is Rs. 100.
• Has a lock-in maturity period of five years,
• NSC encourages disciplined and long-term investments

NSC Investment Eligibility and Limits:

However, tax deductions under Section 80C are capped at ₹1.5 lakhs per annum.

Interest Rates and Taxation for NSC:

The interest rates for NSC are reviewed and revised periodically by the Government of India. As of the latest update, the current interest rate is between 7-8% per annum, compounded annually. While the interest earned is taxable, it is exempted from Tax Deducted at Source (TDS). You can visit NSI India website to see latest interest rates.

How to purchase National Savings Certificate:

To purchase NSC, follow these steps:

1. Visit your nearest post office with your identification and address proof.
2. Fill out the NSC application form.
3. Make the payment for the desired investment amount, either in cash or by check.
4. Collect your National Savings Certificate.
5. You can also invest in NSC through designated banks and their online platforms.

You can also invest in NSC through designated banks and their online platforms. The National Savings Certificate (NSC) offers a secure and attractive investment option just like other government provided investment options like PPF Account.

Important Considerations about National Savings Certificate:

• Premature Withdrawal: NSC comes with a lock-in period of 5 years. However, premature withdrawal is allowed under certain circumstances such as the death of the holder, forfeiture by a pledgee, or when ordered by a court of law.
• Nomination: It is important to nominate a person in case of the holder’s death. The nomination can be made at the time of purchase or during the tenure of the certificate.
• Transferability: NSC can be transferred from one person to another, but the transfer can be made only once during the tenure of the certificate.
• Interest Accrual: The interest on NSC accrues annually and is compounded annually. However, the interest earned is taxable in the hands of the investor.
• Types of NSC: There are two types of NSC – NSC VIII and NSC IX. NSC VIII can be purchased by an individual or jointly with another person, while NSC IX can be purchased by a trust.
• Loan against NSC: NSC can be used as collateral to avail of loans from banks or other financial institutions.

In conclusion, National Savings Certificates have a rich history in India and continue to be a popular investment option for individuals looking for a safe and secure investment option. With the increasing investment limit and attractive interest rates, NSC is an ideal investment option for risk-averse investors.

This is best for individuals seeking long-term financial growth. With its government backing, competitive interest rates, and tax benefits, NSC has become a popular choice among investors. To begin your investment journey with NSC, visit your nearest post office or designated bank today.