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National Saving Certificate – Know NSC Interest Rate, Benefits & More

National Savings Certificate

National Savings Certificate is an investment scheme that one can invest in through a post office. The nature of this scheme is fixed income, which means it is a low-risk product. This product has been created by the Indian Government. National Savings Certificate or NSC is a savings bond, primarily for small and mid-income investors. NSC is also an income tax saving instrument. The interest rate of NSC is generally higher than that of bank fixed deposits.

Anyone over 18 years of age can purchase NSC from the post office. For minors, the rule is that they need to purchase NSC through a joint account with an adult.

Initially, there were two categories of NSC – type IX and type VIII. Type IX was discontinued by the government in 2015.

Maturity of NSC

NSC has two maturity periods – 5 and 10 years. There is no maximum purchase limit on NSC but only an investment up to Rs. 1.5 lakh is tax exempted under the IT act. The NSC interest rate is fixed at 8% annually.

Why should you invest in NSC?

If you are looking to save taxes while earning a steady income on your idle funds, then NSC is the way to go. The interest is guaranteed and since it is backed by the government, your capital is not at risk of erosion.
Also, remember that NSC is a scheme for individual investors and therefore trusts and Hindu Undivided Families (HUFs) can invest in this scheme. NRIs or non-resident Indians too can’t invest in this scheme as it is only open to Indian citizens.

What are the benefits of NSC Certificate?

1. A fixed income
With the NSC interest rate brought fixed at 8%, you will get consistent returns. Also, you don’t stand the risk of losing capital.

2. Saves tax

You can avail a tax benefit of up to Rs. 1.5 lakh under section 80C of the IT act.

3. The minimum investment is Rs. 100

The minimum amount you can invest in NSC is just Rs. 100. You can increase the amount as you see fit at a later date.

4. Maturity

You can choose a maturity period from 5 years to 10 years, based on your requirements.

5. NSC interest rate

The current NSC interest rate is 8%. The rate is revised by the government on a quarterly basis. You receive compound interest on your principal sum.

6. Easily accessible

You can easily purchase an NSC Certificate from the post office. You will need to submit the necessary KYC documents while purchasing.

7. Easily transferrable

You can easily switch your NSC Certificate from one post office to another. This is useful if you are changing locations or for other similar purposes.

8. Use NSC as collateral for loans

You can use your NSC as collateral for taking a loan from both banks and NBFCs. In such scenarios, the postmaster of the concerned post office will put a stamp of transfer of the certificate to transfer it to the bank.

9. No TDS on maturity

Once your NSC matures, you will be able to withdraw the entire amount without any TDS levied on it. However, you have to pay applicable taxes on your own.

10. Nominee facility

You can assign a nominee (even minors are applicable) who will inherit the NSC in case you pass away untimely.

11. Premature withdrawals

NSC does not permit an early exit. However, you can make withdrawals in special cases like the death of the investor.

How can you start an NSC?

To start an NSC, you need to visit your nearest post office. At the post office, ask for an NSC form and fill it out. You also need to carry an identity, an address proof and two passport-sized photographs along.
The certificate you can purchase is in multiples of 100. You can make the payment either through cash, draft or a cheque.

How do you encash NSC after maturity?

You can only purchase an NSC at the post office. Similarly, you can also encash them at the post office currently registered at. For the encashment procedure, you will need the following –

– An NSC encashment form
– The NSC certificate in original
– An identity proof

How do you transfer an NSC from one post office to another?

You have the facility of transferring NSC from one post office to another anywhere in the country. To do that, you will have to submit an application form at the post office from where it was purchased initially. This form is available on the India Post website. You will have to fill out all the details and include your and the nominee’s signature on the form.

Once the details are verified, the NSC is sent to the requested post office.
You can also redeem the NSC at any post office, but the process can take up to 45 days.
Also, you can’t transfer the NSC after maturity.

What to do if you lose your NSC?

To encash your NSC, you will need to furnish the original copy at the post office. In case you lose it or it is destroyed, then here is what you should do –
– File an FIR at the nearest police station.
– You will need to print out an indemnity bond on a Rs. 100 non-judicial stamp paper for the issue of a duplicate certificate. This is only necessary if you lose the NSC.
– Fill out the application form from the India Post website.
– You will need to furnish identity proof as well as a person who will vouch for your identity.
– Submit the form and the indemnity bond at the post office.
– Pay Rs. 5 at the post office for duplicate certificate issuance.
Overall, NSC is a good product if you are looking for a risk-free investment scheme for the medium term.