National Saving Certificate

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What is National Savings Certificate?

The National Savings Certificate (NSC) is a fixed income investment and tax saving scheme that encourages small investors to invest in government bonds. It can easily be obtained from your nearest post office branch and offers many benefits to the investors.

Who should invest in National Savings Certificate?

  • It is a hassle and risk-free option for people looking for an investment option without any critical analysis.

  • It is a tax saving option, so you can go on with bigger amounts to save taxes and earn interest simultaneously.

  • It is a safe option for people aiming for steady returns on their hard-earned money. The government backs it; hence the returns are guaranteed.

Tenure of National Savings Certificate

The National Savings Certificate is available for the given time period only.

  • Certificates under NSC VIII have a maturity period of 5 years.

Certificates under NSC IX had a maturity period of 10 years but were discontinued by the government in 2015.

Benefits of National Savings Certificate

This scheme offers various benefits to its investors. Some of them are listed below:

  1. Secured and Regular Returns: The Government of India secures the scheme; hence you’ll receive regular returns on your investment for sure.

  2. Tenure: The investment time period is as low as 5 years which is not a very long term commitment.

  3. Amount: The minimum amount can be ₹1000 and there is no maximum limit.

  4. Tax Benefit: You can claim a tax benefit of up to ₹150,000 under section 80C.

  5. Interest Rate: The rates are pretty decent and revised every quarter, so, you receive compounded interest annually.

  6. Loan: You can submit the NSC as collateral against a loan.

  7. Easy Process: You can easily buy the certificates from any post office near you and submit the required documents, including KYC.

Tax Benefits of National Savings Certificate Investment

  • Investments up to ₹150,000 are subject to tax deductions under section 80C.

  • The interest earned from the first to fourth year is also subject to a tax rebate with an overall limit of ₹150,000. This interest has to be reinvested with the accumulated investment.

  • The interest of the fifth or final year wouldn’t be reinvested; hence it becomes taxable under the Income Tax Act, 1961.

National Savings Certificate Eligibility

  • Any Indian individual is eligible to register themselves under the NSC scheme.

  • Adults can open accounts in the name of minors and operate the account until the minor attains 18 years of age.

  • A guardian can also buy certificates on behalf of the person with an unsound mind. A joint account can also be opened for up to 3 people.

How to apply for National Savings Certificate?

The process of buying NSC is offline, i.e. you can’t buy them online as of now.

Step 1: You can visit your nearest Post Office Branch to buy NSC.

Step 2: Fill the registration form and attach self-attested documents required like address and ID proofs.

Step 3: You are now supposed to deposit the amount of your first investment. You can make the payment in cash, cheque, or DD. When this transaction is processed you will receive an acknowledgement slip confirming the whole process.

National Savings Certificate Withdrawal

The investments made in National Savings Certificates can not be withdrawn before the maturity period of 5 years.

But the account can be prematurely closed in the following scenarios:

  • On the court’s order

  • In case of death of the account holde

  • In case of death of all the account holders of join account

  • On forfeiture by a pledgee being a Gazetted Officer.

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