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National Savings Certificate

    IndianMoney.com Research Team | Friday, July 22,2011, 05:30 PM
 

National Savings Certificate (NSC)

National Savings Certificate are certificates issued by Department of post, Government of India and are available at all post office counters in the country. This scheme is specially designed for Government employees, Businessmen and other salaried classes who are IT assesses. It is a long term safe savings option for the investor. Trust and HUF cannot invest. The scheme combines growth in money with reductions in tax liability as per the provisions of the Income Tax Act, 1961. The duration of a NSC scheme is 6 years.

Purchase of Certificate

A Certificate can be purchased from all Head Post Offices andauthorized Post Offices. A Certificate can be purchased by an adult for himself or jointly,by an adult on behalf of a minor. Any person desirous to purchase National SavingsCertificate, shall apply in a prescribed Form in any Post Office,in person or through anauthorized agent Small Savings.

Payment

Payment for the purchase of the Certificate may be made to a Post Office in cash, locally executed cheque, order, demand draft drawn in favour of Postmaster, a duly signed Withdrawal Form with the Passbook for withdrawal from the Post Office Savings Bank Account or surrender of a matured old certificate duly discharged as "Received payment through issue of fresh certificate vide application attached."

Rate of Interest

Rate of Interest is 8.16 per cent compounded half yearly and paid after the maturity period of Six years along with the principal amount. The interest, as specified in the table below, shall accrue to the holder of the certificate the end of each year and such interest shall be deemed to have been re invested on behalf of the holder and aggregated the amount of face value of the certificate.

Encashment

The Certificate can be encashed after Six years. The Certificate can be encashed at the Post Office at which stands registered or it can also be encashed at any other Post Office if the Office-In-Charge of that Post Office is satisfied verification from the office of its registration that the person presenting the Certificate for encashment is entitled to.

The person entitled to receive the amount due under a Certificate shall, on its encashment, sign on the back thereof in token of having received the payment. If the Certificate is purchased on behalf of a minor who has since attained majority, Certificate shall be signed by such a person himself, but his signature shall be attested either by the person who purchased the Certificate on his behalf or by any person who is known to the Postmaster.

In case of death of the holder, in respect of which a nomination is in force, the nominee or nominees shall be entitled encash the Certificate at any time before or after the maturity of the Certificate or they can sub-divide the Certificate appropriate denominations in favour of individual nominees or two adult nominees jointly. For this, the surviving nominees shall make an application to the Postmaster, supported by the proof of death of the holder.

Features of National Savings Certificate

  • Rs.100 grows to Rs.160.10 on maturity with interest rate of 8 percent compounded half yearly
  • Minimum investment Rs.100. No maximum limit
  • Available in denominations of Rs.100, Rs.500, Rs.1000, Rs.5,000 and Rs.10,000
  • Deposits up to Rs.100000 qualify under section 80C of the Income Tax Act
  • The certificates are easily transferable from one person to another through the post office.
  • One person can be nominated for certificates of denomination of Rs. 100- and more than one person can be nominated for higher denominations.
  • NSC is available to individual/joint investor, not for H.U.F or Company.
  • The duration of NSC certificates are 6 years.
  • NSC Certificate holder can also takes the loan from bank with the prior approval from the post office.
  • Interest earned from national saving certificates is taxable in the income tax act.
  • No TDS is deduct on the interest amount of NSC Certificate.So no need to deposit Form 15G or 15H form
  • NSC is available in all the post office of the country.

Returns

It is having a high interest rate at 8% compounded half yearly. Post maturity interest will be paid for a maximum period of 24 months at the rate applicable to individual savings account. A Rs1000 denomination certificate will increase to Rs. 1601 on completion of 6 years.

Interest rates for the NSC Certificate of Rs 1000

Year

Rate of Interest

1 year

Rs 81.60

2 years

Rs 88.30

3 years

Rs 95.50

4 years

Rs103.30

5 years

Rs 111.70

6 years

Rs 120.80

Nomination

Nomination facility is available for the National Savings Certificate. If such nomination is not made at the of purchasing the Certificate, it may be made by the single holder, the joint holder or the surviving joint holder, by applying in prescribed Form, at any time after the purchase of the Certificate.

No nomination shall be made in respect of a Certificate applied for and held by or on behalf of a minor.

A nomination made by the holder or holders of the Certificate may cancelled or varied bysubmitting application in precribed Form affixing postage stamps, together with the certificate to postmaster.

How to start?

Any individual or on behalf of minors and trust can purchase a NSC by applying to the Post Office through a representative or an agent. Payments can be made in cash, cheque or DD or by raising a debit in the savings account held by the purchaser in the Post Office. The issue of certificate will be subject to the realization of the cheque, pay order, DD. The date of the certificate will be the date of realization or encashment of the cheque. If a certificate is lost, destroyed, stolen or mutilated, a duplicate can be issued by the post-office on payment of the prescribed fee.

IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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