Table of Contents
- Blog Introduction
- What Is NSC?
- How Does NSC Work?
- Features of National Savings Certificate
- Who Can Open The NSC Account?
- How Do You Open The NSC Account?
- NSC Deposit Limits
- NSC Maturity Period
- What is the current Interest Rate (%) of NSC?
- Compounding Frequency of NSC Account
- NSC In Passbook Mode
- Loss Of your National Savings Certificate
- Pre-Mature Closure of your National Savings Certificate account
- Loan Facility from National Savings Certificate account
- Account Transfer of National Savings Certificate account
- Returns Projection Table From NSC Account
- How to show National Savings Certificate interest in income tax?
- How to encash/redeem NSC certificates after maturity?
- FAQ About National Savings Certificate account
Hello Friends, Welcome to my Blog Investinfy.com the best financial blogs where you will be able to read about the end to end information on many investment schemes and financial topics. In this Blog post we will be focusing on National Savings Certificate investment scheme.
Generally when we want to invest money on any investment scheme , we always asks our friends and relatives that where we can invest ? and they suggests the investment schemes which they like most. Then we invest as per their suggestions, that is good as we consider them as our well wisher , But here I want to mention one thing, if we know end to end information of each investment schemes at least it will help us to understand if that investment scheme is good for us or not.
Hence it is better to have a complete idea about each investment scheme where we invest. Therefor this blog will help you to know end to end information of many Indian investment schemes available right Infront of you.
In this blog post I will be explaining my analysis on National Savings Certificate investment scheme. This will be a complete guide on National Savings Certificate investment scheme. Please read till end of the blog post to know the complete information about this National Savings Certificate investment scheme. Lets get started.
What Is NSC?
NSC stands for National Savings Certificate. NSC is a savings scheme certificate that you can purchase from a Post Office.
How Does NSC Work?
- You Need to deposit a lump sum amount and purchase NSC certificate.
- At the end of 5 years, submit the certificate and get the maturity amount (deposit amount + interest earned)
Features of National Savings Certificate
- This savings scheme is backed by the Government of India.
- This is one of the best and safe investment option.
- This provides the guaranteed returns.
- This saving schemes helps you to invest as little as Rs. 1,000 thereby encourages the habit of investment.
- This scheme specially designed for Income Tax assesses.
- NSC Certificates can be kept as collateral security to get loan from banks.
- Buy NSC every month for Five years. Re-invest on maturity and relax. Upon retirement, it will fetch you monthly pension as the NSC matures
Who Can Open The NSC Account?
- Only Indian residents can purchase NSC certificates.
- NSC certificate can be purchased by.
- an adult for himself.
- an adult on behalf of a minor or a person of unsound mind of whom he is the guardian.
- a minor who has reached the age of 10 years.
- joint account by up to 3 adults.
- You can purchase any number of NSC certificates.
How Do You Open The NSC Account?
- NSC certificate can be purchased by cash or cheque.
- In case of cheque, the date of realisation of cheque in the account will be the date of account opening.
NSC Deposit Limits
- Minimum deposit amount is Rs. 1,000.
- No maximum limit on the deposit amount.
- Deposit amount should be in multiples of Rs. 100. For example, Rs. 1,100, Rs. 1,200, Rs. 1,300, Rs. 1,400, etc.
NSC Maturity Period
NSC Maturity period is 5 years. Earlier, there used to be 10 years NSC as well. But, it has been dis-continued since 20-Dec-2015.
What is the current Interest Rate (%) of NSC?
- Current annual interest rate is 6.80%.
- Interest rate (on the day of account opening) will remain the same throughout the tenure of NSC. It will not change even if there are changes to the interest rate thereafter.
- From 01-Apr-2016, the interest rate of this scheme has been announced on a quarterly basis. Note that this used to be on a yearly basis earlier.
Compounding Frequency of NSC Account
From 01-Apr-2016 onwards, yearly compounding frequency has been followed in this scheme. It used to be on half-yearly compounding frequency earlier.
NSC In Passbook Mode
- Before 01-July-2016, when you invest in NSC, you used to get physical Certificate.
- From 01-July-2016 onwards, Government has decided to discontinue the physical certificates.
- Instead, you will be given the option to keep NSC in Passbook format.
- This is similar to the passbook of the Savings Bank (SB) account.
- After purchasing NSC, the entries will be made (either printed or manually) in the passbook.
Loss Of your National Savings Certificate
- If you lose or lost the certificates that you purchased before 01-July-2016, you can apply for duplicate certificate.
- But, instead of a certificate, you will get Passbook and it will have the certificate number of the old lost certificate.
- If you lose the NSC Passbook that you purchased after 01-July-2016, you can apply for and get duplicate Passbook by paying required fees.
Pre-Mature Closure of your National Savings Certificate account
- You can close NSC pre-maturely before the maturity period.
- But, it is allowed only in the following special circumstances.
- death of the account holder or holders in case of joint holding.
- when ordered by Court of Law.
- Earlier, you had to surrender the physical certificate to close your NSC pre-maturely.
- For the NSC purchased after 01-July-2016, you have to surrender the NSC Passbook to close your NSC pre-maturely.
- Post Office will collect the Passbook and make an entry for delivering the final amount to you.
Loan Facility from National Savings Certificate account
- You can use NSC certificate as a collateral security to get Loan from the Banks.
- Earlier, you had to submit or pledge the certificate in the Bank to get the Loan.
- But, for the NSC purchased after 01-July-2016, you have to submit the Passbook.
Account Transfer of National Savings Certificate account
- NSC certificates can be transferred from one Post Office to another Post Office.
- NSC certificates can be transferred from one person to another person. But, it can be done only once from date of issue to the date of maturity.
- Earlier, the physical certificate of the old owner used to be given to the new owner during the transfer process.
- But, to transfer the NSC purchased after 01-July-2016, the old owner should submit the Passbook.
- Post Office will strike out the entries belonged to the old owner and issue the same Passbook to the new owner in his name.
Returns Projection Table From NSC Account
|Lump Sum Deposited Amount||Interest Rate %||Terms||Total Interest Earned||Maturity Amount|
How to show National Savings Certificate interest in income tax?
You can show the NSC interest earned in one of the following ways while filing ITR:
- You can show the interest earned from NSC under Income from Other Sources.
- You can claim deduction for interest earned from NSC, but you don’t show it as income. In this case, you can consider the entire interest income you have earned over the years as income in the last year.
- Don’t claim the interest earned as deduction or income. In this case, all the interest earned will be counted as ‘Income from Other Sources’ in the last year. Only the first four years’ interest will be counted as deduction.
- It is important that you stick to one of the methods mentioned above throughout the NSC tenure. Experts prefer that you choose Method 1 as the interest and income will be distributed throughout the tenure and does not accumulate to the last year.
How to encash/redeem NSC certificates after maturity?
Upon maturity, the NSC can be encashed at any Post Office branch and not necessarily at the branch where the account is held. If you want to withdraw the money from a branch that is not your account’s home branch, you will have to submit an application with details, such as serial number, issue date, full name, registered and current address.
When you want to encash the maturity amount, you have to carry the following documents with you:
- Original NSC certificate .
- Identity proof.
- NSC encashment form.
- The person entitled to receive the encashment must sign behind the certificate after receiving the payment.
FAQ About National Savings Certificate account
Nomination facility available for NSC accounts
Nomination facility is available. You can nominate either at the time of buying the certificate or after buying the certificate (but before maturity).
I am a NRI can I open NSC account
NRI (Non Resident Indians), Trust and HUF (Hindu Undivided Family) can not open the account.
What is Income Tax Benefits of National Savings Certificate account
Investments of up to Rs 1.5 lakh in the National Savings Certificate can earn the subscriber a tax rebate under Section 80C. Furthermore, the interest earned on the certificates is also added back to the initial investment and qualify for a tax break as well.
For instance, if you purchase certificates worth Rs 1,000, you are eligible for a tax rebate on that initial investment amount in the first year. But in the second year, you can claim a tax deduction on the NSC investment(s) that year as well as the interest earned in the first year. This is because the interest is added to the original investment and compounded annually.
How to buy NSC online?
As of today, you cannot subscribe to NSC online. You will be required to visit the nearest Post Office to fill out the NSC application form and submit it to the executive in order to open an NSC account.
Where can I Open NSC Accounts?
You can open NSC accounts only in Post Office.
How to buy NSC?
Step 1: Visit the nearest Post Office branch and submit the duly filled NSC application form.
Step 2: Attach self-attested copies of the documents and proofs as required by the Post Office. Carry the original documents as well for verification.
Step 3: Make the payment of your investment in the form of cash, cheque, or demand draft.
Step 4: Upon processing your application, an acknowledgement of the same will be provided marking the initiation of your NSC account.
How to open NSC in the Post Office?
Step 1: Visit the nearest Post Office branch.
Step 2: Fill up the application form and submit it with the necessary documents.
Step 3: Make the payment towards the NSC account in cash, cheque, or DD.
Step 4: Once the processing is done, an acknowledgement for the same will be given.
How to get an NSC certificate?
When you submit the application form to open the NSC account along with the KYC documents, you will have to make the payment towards the same. Once this is processed, the Post Office branch will provide you with the NSC certificate.
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