The National Saving Certificate (NSC) is a savings scheme offered by the Indian Post Office, which also provides income tax benefits as deposits are eligible for deduction under Section 80C of the Income Tax Act. The investment limit for NSCs is unlimited, with a minimum deposit amount of Rs. 1000 and increments in multiples of Rs. 100. The NSC Interest Rate for 2023 is fixed at 7.7% per annum (compounded from April 1, 2023), which can be calculated using the National Saving Certificate Calculator. Individuals can also refer to the NSC interest rate chart and complete the NSC online application form to participate in this scheme run by the Indian government.
National Saving Certificate (NSC) Scheme of Post Office
The NSC interest rate chart indicates that the NSC scheme's interest rate is similar to other popular schemes such as the Public Provident Fund (PPF), Kisan Vikas Patra (KVP), Sukanya Samriddhi Yojana, Post Office Savings Account, Recurring Deposit (RD) Account, Senior Citizen Saving Scheme (SCSS), Time Deposit (TD) Account, and Monthly Income Scheme (MIS). Interested individuals can now compare and contrast the NSC scheme with these other schemes.
This article provides information about the NSC account's maturity period, minimum deposits, pledging of accounts, premature closure, and account transfers. The national savings scheme offers a low rate of interest and is only taxable upon maturity. People can use the national saving certificate as collateral and take loans from banks. However, NRIs, HUFs, and trusts are not eligible to invest in or purchase the National Saving Certificate (NSC). We recommend that individuals compare all post office schemes before making any investments.
Types of National Savings Certificates in NSC Scheme
The National Saving Certificate (NSC) comes in 3 types, as described below:
Single Holder Type Certificate – Individuals can purchase this certificate for themselves or on behalf of a minor.
Joint A Type Certificate – This certificate is issued jointly to two adults and is payable to both NSC account holders.
Joint B Type Certificate – This certificate is also issued jointly to two adults, but is payable to either one of the NSC account holders.
To redeem NSCs, they must be submitted at a post office after the maturity period. Upon receipt of the maturity amount, the account holder must sign the back of the certificate and surrender it to the Post Master.
National Savings Certificate Interest Rate
NSC Interest Rate is 7.7% compounded annually but payable at maturity. National Savings Certificate interest amount is taxable. NSC Account Holder does not receive interest earned but it gets re-invested and compounded annually.
Who can open National Saving Certificate Account
- A single adult
- Joint Account (up to 3 adults)
- A guardian on behalf of minor or on behalf of person of unsound mind
- A minor above 10 years in his own name
National Savings Certificates Account Opening Form
National Savings Certificate Account Opening Form is available at the official link at https://www.indiapost.gov.in/Financial/Pages/Content/Post-Office-Saving-Schemes.aspx
At this page, click at the National Savings Certificates link and in this section, click at the “Forms Available” link or directly click at the link here – https://www.indiapost.gov.in/VAS/Pages/Form.aspx#SavingCertificates
In the new opened page, click at the Download PDF link in front of “Application Form for Purchase of Certificate” to open the National Saving Certificate purchase online form as below:-
Tax Benefits of National Savings Certificates
There are several compelling reasons why investors should consider the National Savings Certificate Scheme, including:
Tax Savings: Subscribers can save income tax on income up to Rs. 1.5 lakh by investing in the scheme. The initial investment in the first year is also eligible for a tax break.
Guaranteed Interest Rate: NSC offers a guaranteed interest rate of 7.7% per annum, which is compounded annually and can be checked using the National Saving Certificate Calculator.
Short Maturity Period: The maturity period for the NSC is only 5 years, making it an attractive option for short-term investments.
Availability: This savings scheme is widely available at all Post Offices, making it easy for investors to access.
Tax Break on Interest Earned: The interest earned on the investment is also eligible for a tax break, which means that investors can save on taxes on both the initial investment and the interest earned.
Overall, the National Savings Certificate Scheme is a reliable and accessible option for investors looking to save on taxes while earning a guaranteed return on their investment.
Who Can Invest – Maximum and Minimum Investment Amount
To purchase a National Savings Certificate account, buyers need to submit Form A. Payment can be made through various modes like cash, cheque, pay order or demand draft drawn in favor of the Postmaster. One can also make payment through withdrawal funds from their Post Office Savings Bank Account.
National Saving Certificate Payment – NSC Purchase
Upon submission, the Postmaster will issue a new NSC Certificate immediately or provide a provisional slip for the purchase of the certificate. These certificates can also be transferred from one post office to another.
NSC vs PPF vs KVP vs ELSS vs NPS vs FD
Here we are comparing NSC with other tax saving instruments like Equity Linked Savings Schemes (ELSS), National Pension System (NPS), Public Provident Fund (PPF) and Tax-saving Fixed Deposits (FD). This comparison is on the basis of National Saving Certificate Interest Rate, Lock In Period and Risk profile:-
NSC Comparison with other Schemes
| Investment | Rate of Interest | Lock in Period | Risk |
|---|---|---|---|
| National Saving Certificate (NSC) | 7.7% compounded p.a (Guaranteed) | 5 years | Risk Free |
| ELSS Funds | 12% to 15% (expected) | 3 years | Market Related Risks |
| Public Provident Fund (PPF) | 7.1% compounded p.a (Guaranteed) | 15 years | Risk Free |
| National Pension System (NPS) | 8% to 10% | Till Retirement | Market Related Risks |
| Kisan Vikas Patra (KVP) | 7.5% compounded p.a | 115 Months | Risk Free |
| Fixed Deposit | 6.8% to 7.5% (Guaranteed) | 5 years | Risk Free |
National Savings Certificate Issue & Maturity Period
The maturity period for the deposit is five years from the date of deposit. National Savings Certificate (NSC) has two types of issues, namely NSC VIII Issue and NSC IX Issue. However, the government discontinued the NSC IX Issue in December 2015, leaving NSC VIII as the only issue open for subscription, with a lock-in period of five years. The interest earned on NSC is not subject to TDS, and the subscriber needs to pay applicable tax on the total maturity value.
Subscribers can also take loans from banks against their investment in NSC. To avail this facility, the subscriber must transfer their certificate to the bank from which they are seeking the loan. However, premature withdrawal of NSC is not allowed.
NSC Nomination Facility & Issuance of Duplicate Certificate
People can make nomination and select their nominee at the time of purchase through filling Form 1 or before NSC maturity in Form 2. This nominee can claim the maturity amount if the original account holder dies. This nominee can encash NSC at any time before or after NSC Maturity and can perform following operations:-
- Encash the National Savings Scheme NSS Certificate.
- Sub-division of NSC Certificate in suitable denominations in favor of individual nominees.
For this, nominee must intimate the Postmaster about the death of original account holder by submitting Death Certificate.
National Savings Certificate – Premature Encashment / Withdrawal
Premature withdrawal is not applicable in case of NSC. However, NSC can be encashed prematurely before 5 years under following conditions:-
- On the death of a single account, or any or all the account holders in a joint account.
- On forfeiture by a pledgee being a Gazetted officer.
- On the orders of court of law.
If National Savings Certificate Scheme (NSC) account is encashed within 1 year, then no interest is provided. In case the withdrawal is after 1 year then candidates will get interest but with discount.
Pledging of Account in National Saving Certificate
NSC may be pledged or transferred as security, by submitting prescribed application form at concerned Post Office supported with acceptance letter from the pledgee. Transfer/pledging can be made to the following authorities.
-> The President of India/Governor of the State.
-> RBI/Scheduled Bank/Co-operative Society/Co-operative Bank.
-> Corporation (public/private)/Govt. Company/Local Authority.
-> Housing finance company.
Transfer of Account from 1 Person to Other in National Savings Certificates Scheme
-> NSC may be transferred from one person to another person on the following conditions only:-
(i) On the death of account holder to nominee/legal heirs.
(ii) On the death of account holder to joint holder(s).
(ii) On order by the court.
(iii) On pledging of account to the specified authority.
National Savings Certificate VIII Issue Rules
National Savings Certificate VIII Issue Rules can be checked using the link – https://www.indiapost.gov.in/VAS/DOP_PDFFiles/Savings%20Bank/National%20Savings%20Certificates%20%28VIIIth%20Issue%29%20Scheme%20%202019%20English.pdf
National Saving Certificate – Highlights at a Glance
The important features and highlights of National Saving Certificate are as follows:-
| CScheme | Interest Rate | Minimum and Maximum Balance | Important Features |
|---|---|---|---|
| National Savings Certificate – NSC VIII Issue |
| Minimum Rs. 1000 and multiples of Rs. 100, No Maximum limit |
|
References
— Furthermore for any query, candidates can visit the official website indiapost.gov.in
Comments
Post a Comment