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  • National Savings Certificates Tax Benefits

    The National Savings Certificates offered by the Government of India is one of safest investment tools available at all Indian post-offices. These certificates are designed for salaried employees and businessmen, and they produce fixed income like fixed deposits. Any individual can invest for up to 10 years under this scheme. There are two different issues of NSCs made available by the Government of India which include NSC- VIII Issue and NSC IX Issue. A person can invest for 5 years in NSC (VIII Issue) and 10 years in NSC (IX Issue). Every year in April, the Government of India set a fixed rate of interest for National Savings Certificates. Currently, 8.5% is applicable for NSCs bought for a 5 year term and 8.8% for a term of 10 years. These interest rates will remain fixed for the whole term of investments. National Savings Certificates are available at all Indian post offices; they can be purchased singly, jointly and on behalf of minors.

    Key benefits of investing in NSCs

    Backed by the Government of India, the National Savings Certificates serve as the safest means of investment and come with a lot of attractive benefits. Listed below are the benefits offered by National Savings Certificates:

    • Attractive interest Rates: NSCs offer attractive rates of interest on your savings. You can receive interest up to 8.8%.
    • Assured returns: Investors can receive assured returns by investing in National Savings Certificates for 5 to 10 years.
    • Minimum/maximum limit of investments: You can invest as minimum as Rs.100. However, there is no maximum limit for investment under NSCs.
    • Loan against NSCs: Banks allow loans against NSC certificates. Individuals can use National Savings Certificates as collateral to get loans.
    • NSC Denominations: National Savings Certificates are issued in different denominations such as Rs. 100, Rs.500, Rs.1000, Rs. 5000 and Rs.10, 000. A person is free to purchase any number of National Savings Certificates as per his/her convenience.
    • NSC Certificate Transfer: The National Savings Certificates can be transferred from one individual to another, if the certificate holder intends to transfer.

    National Savings Certificate Tax Benefits

    Apart from the aforesaid benefits, the National Savings Certificates also offer tax benefits. Listed below are the tax benefits available under the National Savings Certificates:

    • Since the interest earned from National Savings Certificate is not paid to the account holder/investor directly and is reinvested, a taxpayer/investor can claim for tax deduction on the interest amount. First, they need to show the interest as income and then claim income tax rebate on it under section 80C of the Indian Income Tax Act.
    • A yearly investment up to INR 1, 00,000 qualifies for income tax rebate under National Savings Certificate.
    • There is no tax deducted source.

    NSC certificate tax benefits can be availed by all salaried individuals and businessmen who come under income tax assessment. Interest earned from investing in National Savings Certificates can be shown under the category called “Interest from other sources”.

    How to calculate NSC tax

    An NSC Tax Calculator can help you calculate the taxable amount on you interest. Once you enter the following details in an NSC Tax Calculator – date of purchase of NSC, total NSC amount, total years of completion after purchase and the applicable rate of interest, the calculator will reveal the total accrued interest and interest accrued in the previous years. Based on results shown by the calculator, you can claim your income tax rebate.

    Important NSC Related Reads

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