What is a National Savings Certificate?
National Savings Certificate (NSC) is a small saving certificate scheme backed by the Government of India. The scheme is one of the postal savings schemes offered by IndiaPost. The objective of the scheme is to encourage small savings and investments among the citizens of India for meeting their financial goals. It can be availed through post offices across the country.
Along with offering good returns, the scheme also provides tax benefits under Section 80C of the Income Tax Act,1961.
Eligibility Criteria - Who can invest in NSC?
Any Indian Resident Citizen is eligible to invest in this scheme.
Certificate can be purchased by
(i) an adult
(ii) Joint Account (Jointly by Maximum 3 adults)
(iii) Minor above the age of 10 years
(iv) Guardian on behalf of a minor or a person of unsound mind.
How to purchase a National Saving Certificate?
- Visit your nearest Post Office branch and ask for the NSC application form.
- Fill the necessary details in the application form and submit it along with the required self-attested documents for verification.
- The payment or deposit can be made either by cash or cheque.
Features & Benefits of National Savings Certificate:
National Savings Certificate has a maturity tenure of 5 years from the date of purchase.
2. Rate of Interest
The rate of interest offered on the NSC account is 6.80% currently which is subject to quarterly revisions by the government.
3. Compounding Benefit
Interest earned on NSC investment is compounded yearly but is payable at maturity. So, it offers higher returns due to compounding benefits.
An investment of Rs.1,000 made into the NSC account grows to Rs.1389.49 at the end of 5 years.
This scheme is available across the post office branches in the country. Application procedure of this scheme is also very simple.
5. Safe mode of investment
Investments in NSC carry very low or almost negligible risks as the scheme is backed by the government of India. Therefore, it is considered as a safe mode of investment.
6. Number of Accounts
One can open any number of NSC accounts. There are no restrictions on the maximum number of NSC accounts.
7. Investment Limits
The minimum amount required to invest in NSC is Rs.1,000 and in multiples of Rs.100 thereafter.
And there is no upper limit on maximum investments in this scheme.
8. Tax Benefits
Investments made into the NSC account are eligible for claiming tax deductions by investors of up to Rs.1.5 lakh in a financial year under Section 80C of the Income Tax Act, 1961.
NSC account can be transferred from one person to another under the following conditions:
- In case of the death of the account holder where a transfer is made to the nominee or legal heirs.
- On the death of a joint holder where the account is transferred to other joint holders.
- On order by the court of law.
- In the case of pledging of the account where a transfer is made to specified authorities.
10. Loan Facility
NSC certificate can be pledged/transferred as a security to avail loans by submitting a prescribed application form at the post office branch.
Transfers or pledging is allowed to the following authorities:
- President of India or Governor of the state.
- Reserve Bank of India, Scheduled banks, Co-operative banks & Cooperative society.
- Public/Private Corporations, Government Companies & Local Authorities.
- Housing Finance Companies.
11. Nomination Facility
Accountholders under this scheme have the facility to add nominees for his/her account both at the time of opening the account & during the tenure of the scheme. In case of multiple nominees, they would have to mention the percentage stakes of each one in the account. The nominees have the rights to receive the corpus in case of the sudden demise of the account holder.
12. Premature Closure
Premature closure of the NSC account is not allowed before the completion of 5-year tenure, except for exceptional cases such as:
- In the case of the death of the single account holder, any or all of the joint holders in a joint account.
- In case of forfeiture, account can be closed by a pledgee being a gazetted officer.
- On the order by a court of law.
Frequently Asked Questions (FAQs)
1. How to make payment for purchasing an NSC certificate?
An individual can make payment either via cheque or cash.
2. Is NSC a postal savings scheme?
Yes, the National Savings Certificate is a postal savings scheme.
3. Is a Nomination Facility available for this scheme?
Yes, a Nomination Facility is available for this scheme.
4. Is Transfer Facility available for this scheme?
Yes, a transfer facility is available for this scheme under specified conditions.
5. Does the scheme allow premature closure by the depositors?
NSC scheme provides a premature exit facility on certain cases such as death of an account holder or by a court order, etc.
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