NSC – National Savings Certificate is an initiative launched by the Government of India.
NSC is a fixed income investment scheme that can be opened with any post office. The goal of this scheme is for the small, medium-income investors, who are given the opportunity to save money while saving on income tax. This scheme is a safe scheme in which it has very little risk like public provident fund scheme.
To start this scheme, you can go to your nearest post office and invest in the scheme. For a minor, you can jointly invest with any other adult. Depending on your preference, you can invest in this scheme for 5 years or 10 years. You can put as much money as you want to invest in this scheme. However, in order to get tax deduction under section 80C, you have to invest a minimum of 1.5 lakh. The NSC certificate gives you the opportunity to earn a high-interest rate of 8% per year.
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Earlier, when the scheme was started, there were two types of certificates in the plan which are NSC, Eighth and NSC are numbered. However, in December 2015, the government closed the NSC IX issue, which means that only the NSC VIII issue is open for subscription only.
You should invest in the NSC for several reasons like:
If you are looking for a secure investment opportunity while earning a decent income, then this is a great investment. It also gives you a fixed income on 8% annual interest.
NSC has promised guaranteed interest, and your money is completely safe with market fluctuations. Of course, other attractive schemes such as mutual funds or national pension systems, these schemes cannot give you enough results to beat inflation, but your money is completely safe.
This scheme is easily available in all post offices across the country.
The government has started the scheme for individuals so that they can help in forming a good financial fund. Therefore, the benefits of this scheme cannot be taken by Trusts or Hindu Undivided Families (HUF).
This scheme is valid for Indian citizens, and NRIs cannot invest in this scheme. You can invest as low as Rs. In this scheme 100 and later can increase it according to convenience.
The interest rate is revised every quarter, and the interest is reduced annually. The entire amount is paid at the time of maturity of the plan.
You have the option of nominating any member of the family, in which case of an unfortunate incident like the sudden demise of the investor, including a minor to get the benefit of the scheme.
At maturity, you get the entire principal with extra interest. Of course, you need to pay taxes if this is applicable because there is no TDS deduction or NSC payment.
This plan does not encourage early exit. But, in exceptional cases such as the death of the investor, money can be withdrawn if the court has allowed it to do so.
- Completely filled out NSC Application form.
- Recent Photograph
- Identity proof – Aadhaar, PAN, etc.
- Address proof – Aadhaar, Voter ID, etc.
- Cash/cheque deposit of investment amount.
These documents can be submitted at any India Post Office to obtain NSC in applicable denominations.
Transfer of National Savings Certificate
NSCs can be transferred from one post office to another as well as from one person to another without impacting interest accrual/maturity of the original certificate. NSC allows the following transfer options to an investor:
- Transfer from one post office to another can be made by filling out and submitting Form NC-32 at the post office which earlier issued the original certificate.
- Transfer of National Savings Certificates can also be made from one holder to another by filling out Form NC-34 at the NSC issuing post office. This can be done only once till the time of scheme maturity.
Loan Against National Savings Certificates
You may be eligible to obtain a loan against your National Savings Certificate investments subject to some key terms and conditions as follows:
- Only resident Indians can apply for a loan against NSC.
- A few leading private and public-sector banks currently offer this facility.
- The margin applicable to loan against NSC depends on the time remaining till maturity.
- The interest rate varies based on individual loan applicant as well as the bank offering the loan.
- The loan tenure equals the residual maturity (time remaining till maturity) of the NSC used as collateral.
The above are just some generic features of loan against NSC, specific features such as margin, interest rate, tenure, etc. tend to vary from one lender to another.
Issue of Duplicate National Savings Certificates
If the original NSC certificate has been lost, stolen, destroyed, defaced or mutilated, you can get a duplicate certificate issued. Just fill out Form NC-29 and submit it at the post office which issued the NSC that needs replacing. Key fields in the form include:
- Details of the certificate(s) such as – serial numbers, denominations, NSC issue, etc.
- The date on which the certificates were purchased.
- The reason for application of duplicate certificate also needs to be mentioned among other details.
NSC VIII has a lock in period of 5 years with premature withdrawal permitted only in specific cases such as:
- On the death of NSC holder.
- On forfeiture by a pledgee who is a Gazette Government Officer.
- On the order of the court for premature withdrawal of NSC.