National Savings Certificate (NSC)
An initiative of the Government of India, the National Savings
Certificate is a fixed income investment instrument which you can
conveniently opt through any post office. This is a savings scheme
that allows investors to seek a fixed return on investment with low
risk.
Generally, NSC is favoured by those who want to bear low-risk and
to diversify their assets via the instrument of fixed return.
The National Savings Certificate is a scheme of fixed income savings
that you can access through every post office.
It is a savings plan that allows investors –
primarily low to mid-income investors – to save on income tax while
investing. As a fixed-income method such as the Public Provident Fund,
Bank Fixed Deposit and Post Office FDs.
You can acquire it on your behalf from your nearest
post office, for a minor or as a joint account with another individual.
NSC comes with 5 years of fixed maturity period. There is no upper cap
on the purchasing of NSCs, but under Section 80C of the Income Tax Act,
only investments up to Rs.1.5 lakh will give you a tax break.
Key Benefits of National Savings Certificate
Previous NSCs are accessible with two tenures-5 years (NSC VIII) and 10
years (NSC IX). Since NSC IX is terminated, only the five years NSC VIII is
still accessible to get enrolled.
Key benefits of NSC are:
- For a set maturity duration of 5 years, NSC can be conveniently achieved at any Indian Post Office.
- The interest rate is subject to periodic change according to declarations from the Ministry of Finance.
- The minimum amount needed for a deposit in a National Savings Certificate is Rs. 100, with no maximum limit on deposit.
- As a tax-saving scheme funded by the government, you can save for up to Rs.1.5 lakh to claim the benefits of 80C deductions.
- Interest is calculated quarterly but only charged at maturity, without any TDS deduction.
- All the major banks and NBFCs hereby recognize the National Savings Certificate as collateral or protection against the insured loans.
- In case of an investor's sudden death, the investor himself can
appoint any individual of his family (minors are also eligible) to
recover his investments in NSC.
Eligibility Required
The primary eligibility conditions for making
investments in National Savings Certificate are:
- All Indian citizens are eligible to invest in NSCs.
- NRIs are not eligible to invest in NSCs.
- Indians who are not tenants can not purchase new NSCs. Moreover, in the case of resident NSC subscribers being NRI before the certificate maturity, these NSCs can be kept until maturity. Karta of HUFs can make investments to NSC against his/her own behalf.
Required Documents
Keep handy all the below-listed
documents.
- Duly filled NSC Application form
- Passport
- Permanent Account Number
- Voter ID
- Aadhaar Card
- Driving licence
- Senior Citizen ID, or Government ID
- Recent passport size colour photographs
- Cheque to be filled with the amount to be invested
- Residence proof such as electricity bill, Passport, telephone bill, bank statement etc.
Tax saving scheme:
As the scheme is regulated by the central government
of India, the capital invested in NSC qualifies for tax savings under
Section 80C of the Income Tax Act up to Rs. 1.5 lakhs yearly.
Flexible investment scheme:
Under National Savings Certificate you can
invest from a minimum amount of Rs 100 with no maximum cap for invest.
Easily accessible:
After submission of correct KYC documents it can be
easily purchased from any post office. It is also transferable from
one Post Office to other and even one individual to another.
Premature withdrawal:
One can close and exit from the scheme except on
the unnatural death of the investor.
Tax benefits
NSCs are mainly tax saving investments as the principal amount invested
provides tax deduction under Section 80C up to the cap of Rs. 1.5 lakhs.
The interest generated annually from NSC (for the first four years) is
thus considered to be reinvested exempt from tax and therefore qualified
as a further deduction under Section 80C (subject to the Rs 1.5 lakhs
gross annual limit). The interest earned in the fifth year, though, is
not re-invested and taxable according to the applicable slab limit of an
investor.
Loan Against NSC
Below are some key terms and conditions for the eligible individuals in
order to avail loan against National Savings Certificate.
- Only Indian residents are eligible to apply for a loan against NSC Currently, this service is provided by some major private and public-sector banks
- The applicable margin to loan against NSC is determined on the remaining period to maturity.
- The interest rate on NSC investment differs according to the individual loan borrower and the bank that provides the loan The loan term is equivalent to the residual maturity of the NSC used as pledge Transfer of NSC
Premature Withdrawal of NSC
NSC VIII has a 5 year lock-in period with premature withdrawal allowed
only in specific cases like:
In case the death of NSC holder.
Upon loss by a pledgee who is an official of the Gazetted
Government.
On legal order for NSC premature withdrawal.
How to issue Duplicate National Savings Certificates
In case lost or stolen of the initial NSC certificate you can request to
issue a duplicate certificate. Just you have to do is fill out Form
NC-29 and submit it at the nearest post office. The form includes some
key fields such as:
Details of the certificate(s) such as– serial numbers,
denominations, NSC issue, etc.
Issuance date of the certificate
Types of NSC Holding
Type of holding
There are several forms under which NSC certificates can be issued. One of them is
Single Holder Type Certificate-
As the name indicates, this kind of certificate can be possessed by just
a single individual. These certificates are given to single individuals
only.
Joint ‘A’ Type Certificate-
Joint A type certificates are those given to 2 individuals. The amount
is payable on maturity to all the individuals who are shared holders of
the certificate. In the event that the certificate has to be transferred
or revoked, or a nominee needs to be switched, a signature is required
from both the joint holders.
Joint ‘B’ Type Certificate
-
Joint B type certificate pays the maturity amount to any of the 2 joint
certificate holders which is the major difference between Joint A and
Joint B type certificate. This maturity payment is not allowed to both
the certificate holders in case of Joint A type holding as discussed
above.
Process to invest in NSC
On submission of necessary KYC documents NSC can be purchased from any
Indian Post Office. NSCs can not currently be purchased online, hence
you have to do it manually by following the below given process.
How to transfer your National Savings Certificate?
Under the
new NSC transfer rules, a National Savings Certificate can only be
transferred once during the period of its term. NSC can only be
transferred after one year from the date of issuance. This provision is
not applicable if the transfer is made at the death of a joint holder to
a family member, legal heir to a deceased holder, on legal procedures
or to existing heirs. The transferee must be eligible to purchase the
certificate for transfer.
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