Sunday, 9 March 2014

National Savings Certificate (NSC)

National Saving Certificate (NSC) was started by the Government of India post Independence as fund was required to speed up the developmental work and also with a motive to inculcate the saving habits among the People. It is a Tax Saving as well as Investment option at the hands of the investor. The tenure of Investment in the NSC varies from 5 years and 10 years (Discontinued) at the present. Before 2011 the minimum tenure for investment was 6 years but now has been brought down to 5 years. NSC’s carry a fixed rate on return on the investment and tax deduction is available on the same. The NSC’s are available in the denomination of Rs 100, Rs 500, Rs 1,000, Rs 5,000, Rs 10,000.The interest earned is taxable but since it is reinvested in the scheme tax deduction is available on it too. However the deduction available under 80C is up to the extent of Rs 1,50,000/- in any financial year.

NSC is an investment bond scheme which can be purchased by any Resident individual from the Post Office of India. The certificate given on purchase bears the name of the holder and also the tenure and the interest earned on it. On completion of the tenure the certificate has to be produced to claim the principal along with the aforesaid interest.

Interest (%)
Issue VIII
Issue IX (Discontinued)
*Rates are applicable for VIII/IX Issue. Fresh Rates declared for New Issue effective from 1st April,'16. 

Features of National Savings Certificate:

  • Investment in the scheme are available for Tax Deduction u/s 80C up to the extent of  Rs 1,50,000/-.
  • Interest and Tenure on NSC is fixed and does not change annually. The rate and tenure announced or changed in any Financial Year only affects the New Investments.
  • Ideal investment option for conservative investors.
  • Provides ease of Investment and anybody can invest.
  • Tax Deduction is available on the Investment and also on Interest earned till the time amount is locked in. But interest earned at the end of the tenure is taxable.
  • Pre mature withdrawal of Investment is possible only in case of death, Order by Court, Forfeiture pledged by the Government.
  • Loan is available on the Investment in NSC.
  • Interest is Compounded Semi annually.
  • Minimum Investment amount is Rs 100 and no limit on maximum investment amount has been set.

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