One of the popular small saving schemes in India, the National Savings Certificate (NSC) offered via post offices across the country provides guaranteed returns (backed by the government) along with tax-saving benefits and regular payouts. The National Savings Certificate is, therefore, a sought-after investment option for retirement planning in India.
Some of the common features of the National Savings Certificate are listed below:
- Types of Accounts: There are three types of NSC accounts available, namely single holder, joint certificate A and joint certificate B.
- Tenure: NSC VIII has a tenure of 5 years whereas NSC IX has a 10-year duration.
- Investment: The minimum investment required under this scheme is Rs.500 while there is no limit to the maximum
- Denomination: An investor can buy NSC certificates of any denomination (e.g, Rs.100/500/1000/5000/10000)
- Interest: The interest is compounded on a half-yearly basis. NSC VIII and NSC IX are currently being offered at 8.5% and 8.8% respectively.
- Tax: For NSC VIII, investment up to Rs.1 lakh qualifies for tax rebate. The interest earned by the investor is reinvested in this scheme itself in that interest can be categorised under the head ‘Income from other sources’. As a result, an account holder or an investor can claim tax deduction on the interest earned as per section 80C of IT Act, 1961. No tax deduction at source. It is important to note that the total interest income earned at maturity of the scheme is not tax-exempt.
- Transferability: The transfer of NSC VIII and NSC IX from one individual to another is permitted once from the date of issue of the scheme till its maturity.
- Maturity: If the maturity proceeds are not withdrawn by an account holder, the scheme becomes available for post office savings scheme interest for 2 years.
- Nomination facility is available under this scheme.
- Online facility is not available.
- Investors can avail of loans by using NSC as collateral
NSC Withdrawal Rules
Though the National Savings Certificate scheme has a lock-in period of 5 years, premature withdrawal is possible under the following circumstances:
- If the NSC holder or holders (in case of joint holders) pass away.
- If any order is given by the court of law.
- If a Gazetted Government Officer pledges for the account to be forfeited and the pledge is in compliance with the rules.
In case the withdrawal of the NSC is done within 1 year from when the account was opened, the amount that is withdrawn will not gain any interest, and only the contributed amount will be returned. However, if withdrawal is done after a year, the entire contribution, as well as interest is paid.
Documentation Required for National Saving Certificate
The documents required for encashment are listed below:
- NSC encashment form
- NSC certificate (original)
- Proof of identity (driving Licence, voter ID)
Signature of the nominee on the certificate is required. Attestation by a guardian is mandatory in case a certificate is purchased on the behalf of a minor. If there are no nominees, the legal heir can opt for encashment upon submission of form SB84. In the event of the death of the account holder, the nominee can opt for encashment by submitting the following forms:
- Annexure 1: Claim settlement application (registered at a post office)
- Annexure 2: Claim settlement application (legal evidence)
- Where can individuals purchase a National Savings Certificate (NSC)?
- What is the procedure to buy an NSC?
- Are individuals eligible for availing any tax benefits for investing in NSC?
- Can holders add nominees in an NSC?
- Can non-resident Indians invest in NSC?
- Are there any eligibility criteria to invest in NSC?
- Upon maturity, where can the NSC be encashed?
- What are the modes of payment that can be made towards the NSC?
- In case an individual’s NSC is stolen, lost, or destroyed, can he/she get a duplicate certificate?
NSCs can be bought at any authorised or head post offices.
Individuals can apply for an NSC by filling the form at a post office.
Under Section 80C of the Income Tax Act, individuals are eligible for tax benefits of up to Rs.1.5 lakh. A tax break is also available on the interest that is earned from investments of up to Rs.1.5 lakh.
Yes, nominees can be added in an NSC.
No, non-resident Indians cannot invest in NSC.
NSCs can be purchased by adults. NSCs can also have joint holders or an adult can purchase an NSC on behalf of a minor.
The NSC can be encashed at any post office. However, the certificate and identity proof must be submitted.
Payments can be made via demand draft, order, cheque, or cash.
Yes, the individual can get a duplicate certificate at a post office. In case he/she has a photocopy of the certificate, the process to get a duplicate certificate becomes very simple.
Important NSC Related Reads
- Documents Required for National Savings Certificate
- How to Calculate NSC Interest
- Loan Against National Savings Certificates
- National Savings Certificate Maturity
- National Savings Certificates Tax Benefits
- NSC Application Form from Post Office
- NSC Post Office Interest Rate
- NSC Post Office Saving Scheme
- NSC Rules and Guidelines
- Know About NSC Transfer Online
- National Savings Certificate Withdrawal Rules
- NSC vs FD
- NSC vs KVP
- NSC vs ELSS
- How to Use NSC as Security for Your Loans
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