National Saving Certificate

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National Saving CertificateNational Saving Certificate

Many options are available for a person when it comes to investments. You can choose from a wide variety of financial services provided by the financial institution/post offices. One of them is the National Saving Certificate or NSC, which is a post office savings product. It is a low-risk investment that comes with a host of benefits.

What is a National Saving Certificate?

The National Saving Certificate (NSC) is a fixed investment income scheme obtained from any post office branch. This scheme is an initiative taken by the government of India mainly for small to mid-income investors to invest while saving their money on tax.

NSC is a shallow risk fixed income product. You can buy this from your nearest post office in your name if a minor can open a joint account in this scheme with their parents/guardians. 

This scheme comes with a fixed maturity period of five years. It has no maximum limit on its purchase, but only an investment of up to Rs.1.5 lakh can gain yourself a tax break under Section 80C of the Income Tax Act. In addition, this certificate makes a fixed interest of 6.8% per annum.

Who should Invest in NSC[National saving certificate]?National Saving Certificate

Anyone looking for a secure investment revenue to earn at a steady interest while saving on taxes can choose to invest in NSC.

This certificate offers complete capital protection and guaranteed interest. In addition, the government has made NSC simply available for prospective investors by making it available in post office branches spread over the country.

The government has supported the National Savings Certificate as a savings scheme for individuals. Hence, Hindu Undivided Families (HUF’s) and trusts cannot invest in this scheme by the government.

Features and Benefits of National Saving CertificateNational Saving Certificate

  1. Fixed income:- Currently, the scheme generates a guaranteed return at the rate of 6.8% for investors. These returns are even higher than the returns offered in FD’s
  2. Types:- This scheme generally has two types of certificates- NSC VII Issue and NSC IX Issue.
  3. Tax Saver:- As govt. Has backed tax saving scheme, a person may claim up to Rs. 2.6 lakh under the section 80C of the income tax act, 1961
  4. Start small:- You can invest as low as 1000 Rs. In this scheme.
  5. Interest rate:- Currently, the interest rate of this scheme is 6.8% p.a. which the govt has revised every quarter.
  6. Maturity period:- The maturity period of this scheme is about five years.

Documents Required for NSC

Listed below are some of the documents required to be submitted to invest in an NSC:

  • The NSC application form.
  • Investors to provide original identification proof such as Passport, Permanent Account Number (PAN) Card, Voter ID, Driving licence, Senior Citizen ID, or Government ID for verification.
  • Photograph.
  • Address proof such as the electricity bill, Passport, telephone bill, bank statement along with a cheque.

FAQ’s on NSC

✅ Is Fd better than NSC?

NSC has two advantages over Fixed Deposits of banks,
  •  lower risks and a higher rate of interest.
  • The re-investment of TDS on bank FDs may be lower than that of NSC, despite the fact that the former offers a marginally higher rate of interest.

✅ Can we buy NSC from the bank?

If you have a savings account with a bank or a post office, you can purchase NSC certificates online if you have access to internet banking. It can be purchased by an investor for himself or herself, on behalf of a minor, or as a joint account with another adult.

✅ Can I break my NSC?

Despite the fact that the National Savings Certificate scheme has a 5-year lock-in period, premature withdrawal is possible in the following circumstances
  • If the NSC holder or holders (if joint holders) dies.
  • If a court of law issues an order.