National saving certificate
National saving certificate (NSC) is an Indian government saving bond used for small savings and income tax saving investment.
It is a part of postal saving system of postal department India.
The Government of India launched the National Savings Certificate (NSC) for increasing the savings of people by providing them tax exemptions for interest.
The investment scheme duration for National Savings Certificate should be inclusive of a maturity period of five years.
Objective of NSC:-
Many options are available for the purpose of savings, and the eligible person can choose any as per the financial goal.
The primary intention of the scheme is to provide the people with an opportunity to open a savings investment in a manner which is simple. Thus, the National Savings Certificate investment scheme can be opened by an indian in any branch of post office.
The investment in NSC qualifies for deduction under section 80c.
NSC comes with a lock-in period of 5 years from the date of purchase.
the interest is calculated on an annual basis.
This interest earned on investment will not be paid to the certificate holder until such time as the investment matures rather it will be reinvested in NSC itself.
Intrest rates are higher about 8% higher as compare to the banks.
Features of national saving schemE
- This certificate can be held by an individual or as a joint investment.
- This kind of a savings investment is meant for individuals only.
- Groups of people like trusts, companies or Hindu Unified Families are not eligible.
- The scheme enables a Representative to avail the NSC on behalf of a minor.
- The minimum amount prescribed for an investment in an NSC is Rs. 100.
- Under NSC issue IX, the investments are disbursed in the denominations of Rs. 100, Rs. 1000, Rs. 5,000 and Rs. 10,000.
- Encashment procedure will be undertaken at the post office only.
Types of NSC:-
There are two types of NSC, namely NSC issue VIII and NSC issue IX. We’ll examine them in brief:
NSC Issue VIII: This is a better investment avenue for those who want to enjoy secured investments and expect tax benefits. Any individual can obtain these certificates except HUFs. The denomination range for this certificate is Rs. 100 to Rs. 10,000. The maturity period of this certificate consists of five years.
NSC Issue IX: The denomination is ranged from Rs. 100 to Rs. 10,000 but the interest,
while comparing with issue VIII is considered to be slightly higher.
The maturity period of this certificate consists of ten years.
TYPES OF NSC HOLDER:-
Joint ‘A’: This Joint ‘A’ certificate is applicable to two adult holders and will be paid to both when the scheme is matured.
For transfer or cancellation or even for nomination, the signature of both the holders would be needed.
Joint ‘B’: The Joint ‘B’ certificate is the same as Joint ‘A’, but differs in the payment of maturity value.
Hence, the maturity value will be given to any one of the two account holders.
Single Holder: This Single Holder Certificate applies to an adult, or an adult on behalf of a minor. It enables the individual to hold the account to himself.
Benefits on investment:-
allows complete free taxation on interest except for earned interest in the last year.
No upper limit has been mentioned for the investment.
Duplicate certificates will be arranged in case of losing the original.
Section 80c of the Income Tax Act allows investment tax benefits to the investment holders.
If the interest is earned, the amount reinvested in the scheme will enhance the invested amount.
The scheme could only be availed if the maturity period of the investment is five years or more.
The nominee can claim to withdraw the investment amount before the maturity period if the NSC holder has died or if the court order prescribes to avail it prematurely.
Documents required :-
Investor should be an account holder or has to open account in post office.
Document’s required are as follows:-
:- 2 passport size photograp
:- Original identity proof for verification
- PAN card
- Voter ID card
- Driving licence
- Government ID card
- Senior citizen ID card
- Telephone bill
- Electricity bill
- Bank Statement with Cheque
- Certificate/ ID card issued by Post office
If minor (under 18)has to open jointly with Guardia.
How to apply for NSC?
For applying NSC applicant have to visit nearest post office :-
If account holder in post office:-
Visit nearest post office get the form for NSC.
Fill and submit the form along with the required documents.
Nominate a beneficiary
Make the payment for investment and get the NSC certificate and check the mathematical error if found in the issued check can be corrected at the spot.
If don’t have account in post office :-
1st open an account in post office and then apply for NSC.
For issuing a National Savings Certificates, a fee of Rs. 5 will be charged in the following scenarios :
- Change in the denomination of the certificate.
- Obtaining a duplicate certificate.
- The nomination is made after the certificates have been purchased.
- On change of submission.
- Transferring a certificate to another person or an entity.