National Savings Certificate (NSC) is a fixed-income scheme of Government of India. National Saving Certificate is easy and safe to invest. National saving Certificate has many features which makes it an attractive investment scheme.
What is National Savings Certificate?
National Savings Institute under the Department of Economic Affairs, Ministry of Finance, Government of India, mobilise savings under various schemes through Post Office and designated bank branches. National Saving Certificate is one of such schemes.
Features of National Saving Certificate
The major features of National Saving certificate are
a) The certificates earn an annual fixed interest, which is decided by the government and notified every quarter. Currently it is 7.7%
b) The investment can be made for a period of 5 years.
c) The investment in this scheme is exempted under section 80C for the purpose of tax calculation as per old tax regime subject to an annual limit of ₹1.5 lakh.
d) The investment amount can start from ₹1000 and in multiple of ₹100 with no upper limit. The denominations are ₹100, ₹500, ₹1,000, ₹5,000 and ₹10,000. An investor can purchase as many certificates as he wishes to.
e) It can be bought from any post office. It can easily be transferred from one post office to another. It can also be transferred from one person to another. This can be done only once till the time of scheme maturity. Such transfers do not impact the interest accumulation and maturity.
f) These certificates are accepted as collateral security for granting loan by banks and NBFCs subject to their own norms.
g) The interest is earned is compounded annually and reinvested. At the time of maturity both principal and accumulated interest is repaid.
h) There is no tax deduction at source on National Saving Certificate payouts. However, the investor must declare interest income earned on 5th year while filing tax return. The interest earned during 1st to 4th year is reinvested and considered as principal.
i) Generally, one cannot exit the scheme early except on the death of investor, or on a court order, or on forfeiture by a pledgee who is a Gazetted Government Officer for it.
j) Investor can nominate any family member (even a minor) so that they can inherit it in the case of an unfortunate event of the investor’s demise.
k) All Indian residents and Karta of HUF in his own name are eligible to invest in National Saving Certificate with no age bar. Individuals can purchase National Serving Certificate individually or jointly (upto 3 adults). Minors and person of unsound mind can also invest in National Saving Certificate under guardians.
l) The following entities are NOT eligible to apply for National Saving Certificate.
• Hindu Undivided Families (HUFs), Trusts, Private and public limited companies.
• Non-Resident Indians (NRIs). However, National Saving Certificate purchased prior to becoming NRI can be hold till maturity.
How to Invest in National Saving Certificate?
The investor can invest in 2 ways,
• Purchase from post office or designated public and private bank branches
• Online subscription if the investor has saving account with post office or any bank with internet banking facility. The steps to be followed in post office website is as below:
1. Go to sign in
2. Click on General Services then Service Requests then New Requests
3. Select “NSC Account – Open an NSC Account (For NSC)”
4. Enter the deposit amount for NSC and choose your debit account linked to PO savings account
5. Go to “Click Here” to read the terms and conditions, accept them and then submit the application online.
6. Enter the transaction password, click on “Submit” and view/download the deposit receipt
The documents required to purchase from post office or bank branch in physical mode are,
• Duly filled NSC application form.
• Original identification proof such as
o Passport
o Permanent Account Number (PAN) Card
o Voter ID
o Driving licence
o Senior Citizen ID, or Government ID for verification.
• Photograph.
• Address proof like electricity bill, Passport, telephone bill, bank statement along with a cheque.
Modes of Holding of National Savings Certificate
There are 3 different modes of holding National Savings Certificate:
1. An individual can hold the certificate in his own self or on behalf of minor.
2. Two individual can hold jointly with equal share of maturity amount or
3. Jointly held but maturity proceeds are paid out to only one of the holders.
Issue of Duplicate National Savings Certificates
In case of loss or theft or mutilation of certificate, the investor can apply to post office for a duplicate certificate. The investor need to fill up a prescribed form with certificate details like serial numbers, denominations, issue date, reason for duplicate certificate etc.
Benefits of National Savings Certificate Investments
The following are some of the key benefits of investing in National Saving Certificate:
1. NSC is a risk free investment backed by Government of India.
2. It ensures a decent return due to tax exemption and government support.
3. Investment amount is flexible for anyone to choose according to capability.
4. It is also convenient to buy and redeem through wide network of post office and bank branches.
5. These certificates can also be purchased in the name of a minor
6. Provides tax deduction benefit on investments of up to Rs. 1.5 lakh annually
7. NSC investments can also be transferred to another family member (nominated by the investor) in case of the investor’s demise
Aadhaar and PAN for NSC account
• As per a recent notification issued by the Ministry of Finance, it is mandatory to provide Aadhaar number and PAN to open a new NSC account. If Aadhaar number is not yet issued, the application of enrolment for Aadhaar or enrolment ID need to be provided as a proof. The Aadhaar number thereafter need to be provided within 6 months from the date of opening the account.
• The existing National Savings Certificate holders have to submit Aadhaar number within 6 months from 1st April 2023, if not yet submitted.
• Similarly, PAN need to be submitted, if not yet submitted, within a period of 2 months from the date of happening of any of the following events, whichever is earliest, namely:
– The balance at any given time in the NSC account exceeds Rs. 50,000
– The aggregate of all credits in the account in any financial year exceeds Rs. 1 lakh
– The aggregate of all withdrawals and transfers in a month from the account is more than Rs. 10,000
• If you fail to submit Aadhaar within the specified period of 6 months and PAN within the specified period of 2 months it will lead to the NSC account becoming inoperational till the time Aadhaar number and/or PAN is submitted to the accounts office