National Savings Certificates
What
is National Savings Certificate?
National Savings Certificates
(NSC) are certificates issued by Department of post, Government of India and are
available at all post
office counters in the country. It is a long term safe savings option for the investor.
The scheme combines growth in money with reductions in tax
liability as per the provisions of the Income Tax Act, 1961. The duration of a NSC scheme is 6 years.
Features
NSCs are issued in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs
10,000 for a maturity period of 6 years. There is no prescribed upper limit on
investment.
Individuals,
singly or jointly or on behalf of minors and trust can purchase a
NSC by applying to the Post Office through a representative or an agent.
One
person can be nominated for certificates of denomination of Rs. 100- and
more than one person can be
nominated for higher denominations.
The certificates are easily transferable from one person to another through the
post office. There is a nominal fee for registering the transfer. They can also
be transferred from one post office to another.
One
can take a loan against the NSC by pledging it to the RBI or a scheduled bank or
a co-operative society, a corporation or a government company, a housing finance
company approved by the National Housing Bank etc with the permission of the concerned
post master.
Though
premature encashment is not possible under normal course, under
sub-rule (1) of rule 16 it is possible after the expiry of three years
from the date of purchase of certificate.
Tax benefits are available on amounts invested in NSC under section 88, and
exemption can be claimed under section 80L for interest accrued on the NSC.
Interest accrued for any year can be treated as fresh investment in NSC for that
year and tax benefits can be claimed under section 88.
Return
It is having a high interest rate at 8%
compounded half yearly. Post
maturity interest will be paid for a maximum period of
24 months at the rate applicable to individual savings account. A
Rs1000 denomination certificate will increase to Rs. 1601 on
completion of 6 years.
Interest rates for the NSC
Certificate of Rs 1000
| Year |
Rate of Interest |
| 1 year |
Rs 81.60 |
| 2 year |
Rs 88.30 |
| 3 year |
Rs 95.50 |
| 4 years |
Rs103.30 |
| 5 years |
Rs 111.70 |
| 6 years |
Rs 120.80 |
Advantages
Tax benefits are available on amounts invested in NSC under section 88, and
exemption can be claimed under section 80L for interest accrued on the NSC.
Interest accrued for any year can be treated as fresh investment in NSC for that
year and tax benefits can be claimed under section 88. NSCs can be
transferred from one person to another through the post office on the payment of
a prescribed fee. They can also be transferred from one post office to another.
The scheme has the backing of the Government of India so there are no risks associated with your investment.
How to start?
Any individual or on behalf of minors and trust can purchase a NSC by applying
to the Post Office through a representative or an agent. Payments can be made
in cash, cheque or DD or by raising a debit in the savings account held by the
purchaser in the Post Office. The issue of certificate will be subject to the
realization of the cheque, pay order, DD. The date of the certificate will be
the date of realization or encashment of the cheque. If a certificate is
lost, destroyed, stolen or mutilated, a duplicate can be issued by the post-office
on payment of the prescribed fee.
Top
| 
