NSC is an abbreviation for National Savings Certificates, a relatively small savings scheme that is run by the Department of Posts. Being a government scheme, it is a very safe option when it comes to investments. The NSC Calculator allows an individual to calculate their returns on an investment utilizing the National Savings Certificate scheme.
Types of National Savings Certificates
A National Savings Certificates is a fixed investment that is available for a time period of 5 years and 10 years. There are three types of NSC certificates that are available for both schemes:
- Single Holder Certificate: This is a scheme that can be taken up by an individual either in the name of a minor or in their own name.
- Joint A Certificate: This is a scheme that can be applied for by two adults who are both joint holders of the certificate. The withdrawal amount that is due will then be paid to both individuals at the time maturity.
- Joint B Certificate: This scheme is made available to adults who want to apply for a NSC scheme. In this scheme, two adults become the joint holders of the certificate and the NSC withdrawal amount will then be paid to either party.
Features & Benefits of National Savings Certificates
There are a number of features & Benefits of NSC. Here are some of the features listed below:
- Interest rates for NSC VIII Issue, which is available for a period of 5 years, is 8.5% p.a.
- Interest rates for NSC IX Issue, which is available for a period of 10 years, is 8.8% p.a.
- There is no maximum cap that is levied on your investment which comes under NSC VIII Issue (5 years).
- Any investment that goes above Rs.1.5 lakhs will qualify for Income Tax Rebate under Section 80C of IT Act.
- HUF and Trust will not be allowed to invest.
- An adult can purchase a single holder type certificate on behalf of a minor or in the name of an adult.
- An interest that is acquired annually but is reinvested will qualify for Tax deductions under Section 80C of IT Act.
- There is no tax deduction at the source.
- National Savings Certificates are very easy to access and can be accessed through your local post office.
- National Savings Certificates are very dependable and reliable.
- They are simple savings schemes that can be set up and understood easily.
- Interest rates do not change for an NSC that you have purchased. You know exactly what you’re getting at the time of maturity.
- National Savings Certificates qualify for tax deductions.
- You can purchase any number of National Savings Certificates.
National Savings Certificates Restrictions
- There is a minimum investment threshold of Rs.100
- NSCs are issued at a minimum cap of Rs.100 even though an individual can purchase a NSC in Rs.500, Rs.1,000, Rs.5,000, and Rs.10,000 denominations
Steps to follow while purchasing NSC
You can purchase a National Savings Certificates by following the steps mentioned below:
- Go to the nearest post office and ask for a NSC form. This is special application form that is designed specifically for a National Savings Certificates. You can also get a copy of this form by downloading the form online.
- Make up your mind on how much do you intend on investing. Keep in mind that NSC helps in reducing the amount of tax that you have to pay so you might just be able to invest more that you initially imagined. You can use a tax calculator to see how much you are able to invest.
- The form is very straightforward and you will have to complete and submit the completed NSC application form to the post office.
- Provide documents needed for identity proof such as driving licence, voter’s ID, Aadhar Card, etc.
- Make the necessary payments by any of the following methods:
- Demand Draft
- Pay order
- By transferring funds from your Savings Account at the post office
- If you already own a National Savings Certificate, you can surrender the matured certificate and you can then reinvest the same back into the new account
- Once you have submitted all required NSC documents, the Postmaster will then check your application, ID proof, and payment method used to check for any irregularities. Once this is done, the Postmaster will then issue a National Savings Certificate. If the Postmaster does not have a National Savings Certificate with him/her, you will receive your NSC through the post which would arrive at your registered address in a couple of business days.
A person who takes out a NSC can also nominate a person of their choice as a beneficiary. This can be done at the time of purchase of the NSC or any time before redemption of the certificate.
There is a prescribed nomination form that’s required to be filled up by the applicant. The nomination can also be changed at any time before the redemption of the scheme. The nominee will then be entitled to the NSC maturity amount at the time of death of the holder. The nominee will have to produce a death certificate at the time of submitting the redemption request.
NSC Withdrawal Rules at the time of Maturity
A person is not allowed to withdraw an NSC prematurely. Once the 5-year or a 10-year term is completed, you will need to submit the NSC back to the post office so that you can get the original investment plus interest. The only time you can withdraw a NSC prior to the term that has been decided upon by the applicant is when the applicant dies, when the court of law orders its closure or when the applicant forfeits the scheme by a Gazetted Government Officer. A penalty is levied on any premature closures.
Remember, interest is not paid if the scheme is closed with one year from the date of issue of the certificate. Interest is paid only after the scheme has competed one year.
Issue with duplicate NSC
When a NSC is lost or stolen, or if the NSC is destroyed, defaced or mutilated in a natural or unnatural calamity, you will have to follow the following steps to help you get a duplicate certificate:
- Fill in the prescribed form for requesting a duplicate NSC.
- You will have to address the application to the post office that you have registered the certificate at first.
- You are required to submit a letter to the post office stating the requirement of a duplicate certificate. The letter will have to contain all the necessary information that is required such as serial no., issue date, and amount.
- You are also required to submit an indemnity bond with one or more sureties that have been approved or a bank guarantee.
- Rs.5 is charged for issuing a duplicate certificate.
Calculation of Tax
National savings certificates attracts a huge tax relief as you can reduce the amount of tax that you would have to pay when you do your tax returns. There are two ways by which you can calculate your tax returns:
- You can calculate your tax returns using the NSC Tax Calculator which shows the amount of tax that you can claim every year when filing your tax returns.
- You can also use India Tax Calculator which allows you calculate your tax return which would include deductions on your investments also.