National Savings Certificate or NSC – Features, Interest Rates, Taxation, Documents Required & more

National Savings Certificate or NSC is ideally a secured investment tool backed by the Government of India.

Mainly it is a savings bond, and individuals can obtain it through various post offices. Additionally, there is no maximum investment amount as such.

It is mainly because an individual can obtain multiple certificates, so you can invest as much as you want. The best part is you can earn a fixed interest, and there is no market volatility.

The scheme significantly aims to offer easy savings options to low-income earners. As the system is available through post offices, it is quite popular among people.

The non-resident Indians or person not from the Indian origin is not eligible to invest in this scheme. Even the Hindu Undivided Families are not eligible to invest in NSC.

What is a National Savings Certificate or NSC?

The national saving certificate is a fixed income investment scheme. People can invest in it by visiting any post office across the country.

Being a government of India initiative, the scheme attracts mainly small and mid- investors. Besides investing, investors can also save on tax. The scheme is both secure and a low-risk tool.

You can visit the nearest post office and buy it in your name individually, for a minor, or with another adult as a joint account. The tenure of the National savings certificate is five years.

No doubt, there is no maximum investment limit under NSCs. But you can only earn a tax benefit under section 80C of the income tax act if you invest up to Rs.1.5 lakhs.

The certificates make an interest rate of 6.8% per annum.

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Eligibility criteria for National Savings Certificate

• A person must be a Citizen of India.
• If a person is not a resident of India, then he or she is not eligible to invest in the scheme.
• There is no age limit for investors as such.
• If you are a HUF or a trust, you cannot invest in this scheme.
• The majority of the banks accept this scheme as collateral security against loans.

Check out all Govt. Savings Scheme available for Investment

Who should choose to invest in NSC?

If you are someone who wishes to invest in a safe investment tool and also earn a steady income, then this scheme is best for you.

You can get complete protection besides fixed earnings under the national savings certificate.

But this scheme doesn’t offer inflation-beating returns, unlike tax-saving mutual funds and the National Pension System.

The scheme is available for prospective investors as they are available in post offices.

Interest rates under National Savings Certificate

The interest rates under the National savings certificate are most likely to vary as per maturity.

The scheme is a government of India initiative and is mainly available in two tenors variants with regards to maturity.

If you withdraw the money before one year, then no interest rate is applicable. While if you choose to withdraw the money after completion of 1 year, then the interest rate is applicable.

For withdrawal, investors have to bring some original NSC documents and fill the encashment form.

Additionally, you also need to get some identity proofs. In the case of minors, a guardian’s attestation is mandatory. Annex 1 and 2 forms are compulsory for nominees applying for withdrawals.

Learn everything about Retirement Planning here

Why Invest in National Savings Certificate or NSC?

No doubt, a National savings certificate is quite lucrative, but potential investors need to understand the benefits and features.

A fixed-rate of return

Under this scheme, investors can avail of fixed rates of returns. It is mainly because the interest rate of the scheme is not subject to market fluctuations.

But investors need to know that government can update it every six months.

Choice of tenure

The government of India offers two terms under this scheme that is for five years and ten years. The NSC rate depends mainly upon tenure.

Investment amount choice

Investors can choose the investment amount. At the same time, the minimum investment amount is Rs.100, which makes it quite popular among low-income earners.

Additionally, investors have an option to invest in multiples of Rs.100. There is no maximum investment limit under the scheme.

Hence, it allows individuals to invest as per their savings, income, and financial goals.

Tax benefits

Under this scheme, a plethora of tax benefits are available. It can feature both principal and interest. Under section 80, C of the income tax act, the investments qualify for several deductions.

Easy accessibility

The national savings certificate is applicable in almost all post offices of the country, so people can easily access it.

Quick nomination

Besides fantastic interest rates, the savings certificate allows the investor to nominate the scheme. The nominee receives all the benefits after the demise of the holder.

Additionally, the nominee can receive the complete corpus of the scheme after it matures.

Easy to transfer

The investor can quickly move the policy from one post office to another if the investor plans to relocate.

Its transfer doesn’t impact the interest rate as the government of India decides the interest rate.

Furthermore, the scheme also allows investors to transfer ownership, and they can avail it only once.

Tax Benefits under the National Savings Certificate

No doubt, the national savings certificate offers a fantastic return on investment, but investors must also be aware of the tax benefits. It is mainly essential to maximize its benefits.

The investment scheme is eligible for deduction under section 80 C of the income tax act to a sum of Rs.1.5 lakhs. The interest earned every year is added to the maturity amount.

It is deemed to be invested until the scheme attains maturity. At maturity, the investor gets the interest, but it is taxable.

How can you Invest in the National savings certificate?

You can buy NSC from any Indian post office by submitting some KYC documents. Some of the steps to make investments under NSC are:

• Firstly you need to fill out the NSC forms, which are available both offline and online.
• Along with the forms, you need to submit the self-attested copies of the documents. For further verification, you also have to carry original documents.
• You can make payment to the amount through cheque or cash.
• After you purchase the certificates, then you can print and collect the amounts from the post office.

Documents Required for NSC

• Application formed filled correctly
• Recent photograph
• Identity proof, including Aadhar card, etc.
• Address proof, including Aadhar card, etc.
• Cash or cheque for the deposit amount.

You can submit these documents at any of the post offices.

Loans against National Savings Certificate

You can surely get a loan against National savings certificate but after meeting some terms and conditions:

• You can apply for the loan only if you are a resident Indian.
• Currently, only a few leading private sector banks offer this facility.
• The margin applicable on the scheme most likely depends upon the time until maturity.
• The interest rate is most likely to vary from bank to bank.
• Loan tenure is mostly equal to residual maturity.

Conclusion: National Savings Certificate or NSC

Investors who are not willing to take many risks must invest in this scheme.

Additionally, the government of India ensures everyone across the city can avail of this scheme. Furthermore, you can easily have access to it.

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