National Savings Certificate (NSC) is a government-run investment scheme that guarantees fixed returns to investors. Since NSC is backed by the Indian Government, it’s a highly secure investment option. Besides, the scheme exhibits a lot of tax-saving potentials.
It’s an ideal savings instrument for individuals looking to park their funds in low-risk investment products. The scheme can be purchased by Indian residents from any nearby post office. The best part about NSC is that it doesn’t require a very big initial investment, unlike the various other schemes.
Now, we’ll discuss the basics of the National Savings Certificate to help you gain an in-depth understanding of the same. Having said that, let’s proceed with this article on NSC!
Eligibility Criteria For The National Savings Certificate (NSC)
Let’s take a look at the eligibility criteria for investing in the National Savings Certificate.
- Only Indian residents are allowed to invest in the National Savings Certificate.
- Non-resident Indians (NRIs) are not eligible to invest in the National Savings Certificate.
- Hindu Undivided Families (HUFs) and trusts are also not eligible to invest in the National Savings Certificate. Nonetheless, the Karta of Hindu Undivided Families (HUFs) can invest in NSC but only in their own name.
Taking the above-mentioned eligibility criteria into consideration, the NSC scheme is exclusively meant for the citizens of India.
Advantages Of National Savings Certificate
Here are the key advantages of the National Savings Certificate.
Guaranteed Returns: NSC gives investors the opportunity to enjoy a regular income at an annual interest rate of 7.9%.
Period Of Maturity: Presently, the National Savings Certificate features a maturity period of 5 years (NSC VII).
Compounding: The accrued interest is added to the principal amount every year. You receive interest on the principal amount in the next year upon maturity.
Loan Facility: Loan facility is available through authorized banks. However, you can avail the loan facility only if you submit your NSC certificate as collateral.
Minimum Investment: Investing in NSC is very easy as you can get started with a small investment. Also, you can purchase a NSC certificate by paying an amount as low as Rs. 100.
Nomination Facility: Under the nomination facility of NSC, an investor can nominate any family member, be it an adult or minor. This is for the purpose of inheritance of the scheme in the case of an unfortunate event.
Disadvantages Of National Savings Certificate
Premature Withdrawal: One cannot withdraw prematurely from the NSC scheme except for cases like the death of the investor.
Tax: Interest earned on NSC is taxable. However, you can claim deduction under section 80C.
NSC Interest Rates Table
The interest rate for the National Savings Certificate changes quarterly. For the present quarter (July-September), NSC’s interest rate is 7.9%.
Here is the NSC interest rate chart for FY 2019-20
|Financial year||Apr – Jun||Jul – Sep||Oct – Dec||Jan – Mar|
|2019 – 20||8.00%||7.90%|
|2018 – 19||7.60%||7.60%||8.00%||8.00%|
|2017 – 18||7.90%||7.80%||7.80%||7.60%|
NSC Interest Rate Chart 2019-20
Here is the NSC interest rate chart for 2019-2020
NSC Tax Benefits
The National Savings Certificate comes with some really amazing tax benefits. NSC investments lakhs can earn you a tax deduction as per Section 80C upto the limit of 1.5 Lakhs. Not only that, the interest that you earn on the NSC certificates is also eligible for tax benefits. It’s so because the interest gets automatically added to the principal amount.
Is NSC Interest Taxable?
Yes, NSC interest is taxable. But you can claim a deduction on the interest part under Section 80C up to the limit of 1.5 Lakhs. The interest amount is added to your income and taxed according to your slab.
There’s another thing to know if you have already claimed tax benefit of 1.5 Lakhs via instruments like PPF. In such a case, you will not get any tax benefits from NSCs.
Is NSC Maturity Amount Taxable
Yes, the NSC maturity amount is taxable. Nevertheless, the entire maturity amount is not taxable. Only the interest earned in the last year is taxable. Also, you cannot claim tax deduction under 80C upon maturity as the amount is not going to be reinvested.
NSC Calculator 2019
You can download the NSC calculator 2019 by clicking on the link mentioned below. It will show you the maturity amount that you would receive at the end of 5 years.
Documents Required For Investing In National Savings Certificate
You require following documents for investing in the National Savings Certificate. Moreover, these documents must be submitted in a nearby post office for getting approval for NSC.
- Completely filled and self-attested NSC application form.
- Authentic proof of identity and address such as PAN Number, Aadhar Card, Voter ID, Passport, etc.
- Original Photograph
- Deposit of the total investment amount as per your preferred mode of payment – Cheque/Cash.
Step-By-Step Procedure To Invest In National Savings Certificate
You can buy the NSC certificate from any of the authorized post offices in India. However, you must have all the KYC documents to invest in the National Savings Certificate. Here is the step-by-step procedure to invest in National Savings Certificate.
- Fill up the application form of NSC with all the required details. (You can get the application form from nearby post offices as well as online.)
- Keep all the important KYC documents ready and submit copies of the same. Moreover, you must have the original KYC documents at the time of verification.
- Make the deposit for the investment amount through cash/cheque.
- Once your application for NSC certificates is successful, you can collect it from the authorized post office. .
Nowadays, there are a lot of savings options for those willing to make an investment. Nonetheless, you should invest on the basis of your future financial goals for the desired outcomes. If you’re looking for a low-risk investment product that will offer good returns, you should go for NSC.
At present, the facility for online NSC purchase is not there.
Also, share your valuable opinions in the comments section.