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National Savings Certificate

When it comes to savings schemes or financial investments there are several options that are available in the market. NSC or the National Savings Certificate is one savings scheme that is backed by the Indian Government. The scheme is widely acclaimed by the people as it offers guaranteed returns and tax benefits. Interest rates of this scheme are decided by the Indian Government on a quarterly basis. Having a duration of 5 years, any individual who is interested in investing in the scheme can invest at post offices.

The NSC scheme requires a minimum contribution of Rs. 100 with no limit to the maximum amount of contribution that can be made towards the scheme. For the FY 2018-2019, the rate of interest which is offered by the scheme was 8.0%. Presently, these certificates earn a fixed interest at a rate of 6.8% per annum.

Also, individuals can enjoy tax benefits over the contributions that they made towards this scheme under Section 80C of the Income Tax Act. Further, the interest which is generated is compounded on an annual basis. Under this scheme, individuals are also able to transfer the certificate to another person’s name.

Who should invest in this scheme?

Individuals who seek to make a safe investment and desire to save on taxes can make an investment in the NSC scheme. This scheme provides the investor with guaranteed interest and capital protection as well. However, the NSC is unable to provide inflation-beating returns. Anyone interested to invest in this scheme can visit the nearby post office branch and have easy access to this scheme.

Features and benefits of the NSC :

  • Fixed income : The NSC scheme provided its investors with higher returns. Presently, the savings scheme is offering a guaranteed return at the rate of 6.8 % for its investors.

  • Types: The scheme earlier had two types of certificates but currently only the NSC VIII issue is open for subscription.

  • Tax Saver: Under Section 80C of the Income Tax Act, 1961, an investor in this scheme can claim up to Rs. 1.5 lakh since it is a government-backed savings scheme.

  • Start Small: In the NSC scheme, an individual has the option to start small. One can invest a lower amount such as Rs. 1,000 as starting investment and can also increase the amount in the future.

  • Loan Collateral: The NSC scheme is also accepted as collateral or security for the secured loans by the banks and the NBFCs.

  • Power of compounding: Indeed, the returns on this scheme do not beat the inflation, but the interest that you earn on your investment gets compounded and reinvested by default.

  • Nomination : In the NSC scheme, the investor has the option to nominate a family member. In case of any unfortunate event like the demise of the investor, the family member can inherit the scheme benefits.

  • Premature withdrawal: A scheme cannot be exited early by the investor. Premature withdrawals are accepted in exceptional cases only such as if there is a court order or at the time of the death of the investor.

  • Maturity Period : The NSC scheme has a Maturity period of 5 years.

  • Access: To purchase the NSC scheme, an individual must go through the KYC verification process. The investor must submit the required documents and he can purchase this scheme from any post office across the region. Another important aspect of this scheme is that the certificate is very easy to transfer from one post office branch to another.

  • Corpus after maturity : Once the scheme gets matured, the investor will receive the entire maturity value. Furthermore, the investor should pay the applicable tax on it as there is no TDS on the NSC payouts.

  • Tax benefits that investor gets in the NSC scheme : Under Section 80C, an individual is entitled to earn a tax rebate if the investment of up to Rs. 1.5 lakh is made in the National Savings Certificate. It is to be noted that the interest generated on certificates is added back to the investment made in the first place and it qualifies for a tax break as well.

How to invest in the NSC scheme through electronic mode?

If an individual wants to invest in the NSC scheme via electronic mode then there must be a bank or post office savings account for that individual. Through the internet banking facility of the savings account, an individual can easily invest in the NSC scheme. The NSC scheme is a Government of India initiative and a safe fixed-income investment scheme that you can open with any post office branch across the country. Thus, individuals who are seeking to invest while saving on income tax can for sure opt for this entrusted savings scheme. Before investing in the scheme make sure you have done your proper research such that you chose the best savings scheme as per your requirement.