National Savings Certificate (NSC)

Admin
March 03, 2023

National Savings Certificate (NSC) is a savings scheme offered by the Government of India that aims to encourage small savings and investments among the citizens of the country. NSC is a fixed-income investment scheme that offers a guaranteed rate of return, making it a popular choice for risk-averse investors.

NSC is offered by the Department of Posts, Government of India, and can be purchased from any post office across the country. The scheme has a lock-in period of 5 years and offers an attractive interest rate. The interest earned on NSC is tax-free up to a certain limit, making it a tax-efficient investment option.

In this article, we will discuss NSC in detail, including its features, benefits, eligibility criteria, and the process of investing in it.

Features of National Savings Certificate (NSC)

  1. Investment Amount: NSC can be purchased for a minimum amount of Rs. 100 and in multiples of Rs. 100 thereafter. There is no upper limit on the investment amount.

  2. Lock-in Period: NSC has a lock-in period of 5 years, which means that the investment cannot be redeemed before the completion of the lock-in period.

  3. Interest Rate: The interest rate on NSC is reviewed and announced by the Government of India every quarter. Currently, the interest rate on NSC is 6.8% per annum (as of March 2023).

  4. Interest Calculation: The interest on NSC is compounded annually and is paid out at maturity along with the principal amount.

  5. Tax Benefits: The interest earned on NSC is eligible for tax exemption under Section 80C of the Income Tax Act, up to a maximum limit of Rs. 1.5 lakhs per annum. However, the interest earned is taxable.

  6. Transferability: NSC can be transferred from one post office to another across the country.

  7. Nomination Facility: NSC allows the investor to nominate a person who will receive the proceeds of the investment in case of the investor's death.

Benefits of National Savings Certificate (NSC)

  1. Guaranteed Returns: NSC offers a guaranteed rate of return, which makes it a safe investment option for risk-averse investors.

  2. Tax Benefits: NSC offers tax benefits under Section 80C of the Income Tax Act, which helps investors save on taxes.

  3. Low Investment Amount: NSC can be purchased for a minimum amount of Rs. 100, which makes it accessible to a wide range of investors.

  4. No Upper Limit: There is no upper limit on the investment amount in NSC, which means that investors can invest as much as they want.

  5. Transferability: NSC can be transferred from one post office to another across the country, which makes it convenient for investors who relocate frequently.

Eligibility Criteria for National Savings Certificate (NSC)

  1. Citizen of India: Only citizens of India are eligible to invest in NSC.

  2. Minimum Age: The minimum age for investment in NSC is 18 years.

  3. Joint Investment: NSC can be purchased jointly by up to three individuals.

  4. Minors: Minors can also invest in NSC, but the investment has to be made on their behalf by their parents or guardians.

Process of Investing in National Savings Certificate (NSC)

  1. Visit the Post Office: NSC can be purchased from any post office across the country. Visit the nearest post office and fill out the NSC application form.

  2. Submit Documents: Submit the required documents, such as identity proof and address proof, along with the application form.

  3. Make Payment: Make the payment for the NSC investment amount. The payment can be made in cash or through a cheque.

  4. Receive Certificate: Once the payment is made and the documents are submitted, the post office will issue an NSC certificate to the investor. The certificate will mention the investment amount, the interest rate, the maturity date, and the name of the investor.

  5. Hold the Certificate: The investor should keep the NSC certificate safely, as it is a proof of the investment and will be required at the time of redemption.

  6. Renewal or Redemption: At the end of the lock-in period, the investor can choose to renew the NSC for another 5 years or redeem it. If the NSC is not redeemed, it will continue to earn interest for another 2 years.

Conclusion

National Savings Certificate (NSC) is a safe and attractive investment option offered by the Government of India. It offers a guaranteed rate of return, tax benefits, and a low investment amount, making it a popular choice among investors. NSC can be purchased from any post office across the country, and the process is simple and convenient. However, investors should keep in mind the lock-in period of 5 years and the tax implications of the investment before investing in NSC.